ECONOMIC SYSTEMS

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ECONOMIC SYSTEMS by Mind Map: ECONOMIC SYSTEMS

1. Communism - The government makes all of the decisions regarding production and distribution.

1.1. The benefits of this type of system would be free healthcare and education. Both of these services are available and free to every resident.

1.2. CUBA is a communist country that has suffered from the lack of goods and services such as infrastructure in roads and public transportation. However, their medical services have attracted people from other countries as their prices for medical treatments are much lower.

1.3. The cons of this type of system would be the lack or shortage of food and clothing. Since there is no revenue or profit from these types of goods then the government does not know how much to produce and when. The government can also control the media and the type of education that each individual shall receive.

2. Socialism - Some of the basic systems such as utilities, coal mines, and steel mills should be owned by the government so that they can evenly distribute the profits to all the people.

2.1. Denmark offers free healthcare, childcare, and they have the lowest inequality rates in the world. However, the country has one of the highest tax rates that people rely on public transportation instead of purchasing a vehicle. If you purchase a vehicle, the tax rate is high for the purchase and there is also a high tax on fuel.

2.2. The benefits of this type of system is social equality. People benefit free education all the way thru college, free health care, and free child care. The employees also benefit from larger amounts of time off such as vacation and sick time.

2.3. The cons of this type of system is the high tax rate that profitable businesses are charged. This behavior has made professionals such as doctors and lawyers to move out of the country due to the high tax rate. It reduces the incentive to make a big profit if you will be paying it back to the government in the form of taxes.

3. Capitalism - Producing and distributing goods and services are owned by individuals. They are operated to make profits and the owners have the discretion of how much to produce, how much their employees will make, and the cost of goods or services.

3.1. The benefits of this type of system are the freedom of choice. The right to own your own property and run your business as you feel fit. You have creative liberty to build your own business and keep all of the profits. There is the freedom to compete with other business to offer a better product at a much competitive price.

3.2. The cons of this type of system are the unethical practices of some business owners. As the need to increase profits, business owners may be inclined to behave in illegal activity such as false advertisement. There may be a great divide from those who are rich and poor.

3.3. Germany is a country that has benefited from a capitalist economy. Germany does tax every working individual in order to pay for infrastructure such as roads, bridges, and public transportation. They have established a minimum wage as well.

4. The United States benefits from both a capitalist and socialist economy. There are many private owners that seek to improve profits by implementing strategic initiatives. Employees are motivated to work hard as they also benefit if the company is performing well. Consumers benefit from a wide variety of goods and services. Aside from the economic liberties, this system also provides freedom of speech, religion, press, job choice, and elections.

5. Economic Systems are important in order to establish who has control of certain goods and services. In order to determine the necessary resources, it is vital to understand the full scope of production and distribution. These businesses then provide the government with the necessary income they need in order to make improvements in the country.