American economy

Text III.

The United States has a mixed economy because private businesses and government both play important roles. Indeed, some of the most enduring debates of American economic history focus on the relative roles of the public and private sectors.

The American free enterprise system emphasizes private ownership. Private businesses produce most goods and services, and almost two-thirds of the nation's total commercial output goes to individuals for personal use (the one-third is bought by government and business). The consumer role is so great, in fact, that the country is sometimes characterized as having a "consumer economy".

However, like in all modern economies, there are limits to free enterprise and private ownership. Americans generally agree that some services are better performed by public rather than private enterprise. For instance, in the United States, government is primarily responsible for the administration of justice, education (although there are many private schools and training centres), the road system, social statistical reporting, and national defence. In addition, government often is asked to intervene in the economy to correct situations in which the price system does not work. It regulates "natural monopolies" and it uses antitrust laws to control or break up other business combinations that become so powerful that they can surmount market forces.

Government also takes care of issues beyond the reach of market forces. It provides welfare and unemployment benefits to people who cannot or will not support themselves, either because they encounter problems in their personal lives or lose their jobs as a result of bad economy. Government pays much of the cost of medical care for the aged and those who live in poverty, it regulates private industry to limit air and water pollution, it provides low-cost loans to people who suffer losses as a result of natural disasters; and it has played the leading role in the exploration of space, which is too expensive for any private enterprise. All of this is paid for by a system of progressive taxation.

In this mixed economy, individuals can help guide the economy not only through the choices they make as consumers but through the votes they cast for officials who shape economic policy. In recent years, consumers have voiced concerns about product safety, environ­mental threats posed by certain industrial practices, and potential health risks citizens may face. The government has created agencies and protected consumer interests and promote the general public welfare.

The US economy has changed in other ways as well. The population and the labour force have moved from farms to cities, from fields to factories, and, above all, to service industries. In today's economy, the providers of personal and public services far outnumber producers of agricultural and manufactured goods. As the economy has grown more complex, statistics also reveal over the last century a sharp long-term trend away from self-employment toward work for others.

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