Video Transcript: Political and Economic Systems

hello, welcome back. We're going to discuss political and economic systems.  Political systems. Countries can have a variety of political systems. They include direct democracy, representative government, a monarchy and a dictatorship,  direct democracy, sometimes called pure democracy, people gathered to vote  on laws in ancient Athens and Rome. So you're having a direct democracy,  right? You actually showing up, and you're raising your hand to cast your vote,  and you're being counted on the spot, right? That's direct democracy, so it's very difficult to do in large numbers. People may not know much about the issues  they vote on. States and towns in the US use ballot questions to get the public's  vote on important issues. Representative government, often called the Republic. Like we have in the United States, the people elect representatives to make the  laws. So the people elect the representatives. Instead of showing up to  Congress every citizen to vote on each issue, we elect a representative to go  and vote on those issues. For us, citizens must pay attention to vote smartly, but do not need to be experts on every law right? So we need to make sure that  we're paying attention to the economic or the political climate so that we can  vote for the right individual that promotes our views, citizens must pay attention  to vote smart but not need to be experts on every law. Examples are the US,  Canada, Mexico and the United Kingdom. A monarchy is a ruler that inherits the  throne by birth. You might see that in Great Britain, right? They have a  monarchy. They have a queen and a king, citizens do not have the right to  decide laws. Fewer monarchies in the past 100 years are examples of Jordan,  Kuwait, Saudi Arabia, others, such as the United Kingdom, Sweden, Japan, are  now constitutional monarchies. But with a monarchy, a monarch is a ceremonial  leader. Dictatorship, one person who controls the total government power.  Citizens have few rights, and they don't make decisions. Dictators sometimes  call themselves president and hold elections, but it's just for show, because no  one else is allowed to run against them. Examples include Cuba, North Korea,  Libya, Egypt, China. So. So, what is economics when? Why does this matter in  management, right? So, the study of economics is how goods and services are  produced, distributed and consumed the people who make goods or services  are called producers, right? So the people who make these goods and products  are producers, right, and the people who buy them are consumers. So there's  four different types of economic systems. One, traditional, two, free enterprise,  three, command four, socialism, let's talk about these, right? Traditional  economy so people find food for themselves and trade for needed goods. We  don't see this very seldom, if ever, and our current world, right? We aren't  hunters and gatherers anymore, right? We have markets now. We go and buy  things, right? But this is a traditional initial economy, right? No companies or  governments involved. We all work for ourselves. We all go get our food. We all  build our own homes, etc. This found, this system is found among herders or  small farms, free enterprise, free enterprise, sometimes called capitalism or 

market economy. Obviously, the United States is an example of a free enterprise economy. People own companies and decide what to produce to make  consumers happy, right? They want to have supply and demand, right? So  consumers have a demand for a product. Companies come in, provide that  demand with supply, and then consumers are happy. Business owners can earn  big profits or they can lose money if a business fails, right? So they're taking a  risk with their capital, their assets, their resources, but they can make profits, or  they can fail, make losses, some businesses sell stock to get more capital to  invest. So one way for a company to raise money is by selling equity into that  company, and people buy it price per share, then they have an ownership stake  into that company, and then the company uses the sale from that stock to fund  their operations. A command economy. The government makes economic  decisions about what should be produced and how much it should cost.  Communist countries usually have a command economy. In communism, the  government rules all industries. They own, all property, they set all wages,  prices, and people are told what to do socialism. In socialism, the government  runs some of the industries, such as oil, and uses profits to pay for health care  and education, example, Venezuela. So let's look at a comparison of  communism versus capitalism. Capitalists say that people have no reason to do  a good job in communism because everyone gets the same pay. Products are  boring and poorly made. There's no reason to innovate, there's no reason to  drive a market. There's no reason to make products that are going to add  consumer happiness, because the government controls everything. This is what  the capitalists think about communism, right? The communist government  controls all the resources. So therefore they tell the people what to make, and  then the communist government controls the profits. Whereas capitalism, you  have a free market with free people that are able to decide through the market  what they want, and then people can come in and supply that demand.  Communists say that capitalism is unfair to the poor because people at the top  of the company get rich while workers get low wages. They also say capitalists  wipe out little companies and destroy the environment to get money while  sometimes this is true, right? We need to be ethical in our approach to business  so that we can make sure that we aren't wiping out smaller businesses, right,  that we're paying appropriate wages, that we're not exploiting our workforce,  and then we're mindful of the environment, right? It's our job as stewards of the  earth to ensure that we take care of it and take care of our people so that we're  able to make a happy, strong, vibrant, growing economy and lifestyle for our  citizens. So the Cold War took place from 1945 to 1991 after World War II,  between the US and the Soviet Union, and it was based on getting nations to  line up on the communist side or the capitalist side. So you'll notice how Europe  was split down the middle. The Soviet Union was from East Germany to the  Soviet Union, and then Western Germany consisted of France, England, etc. 

Was on that were on the capitalist side. Today, since the Cold War is over.  Russia has allowed some capitalism to come in, which has helped create a  better, more substantial economy for their citizens. And Communist China also  allows some capitalism. So putting politics and economics together, communist  countries have been dictatorships and which leaders have tried to control all  aspects of the country, which we have found over time, just doesn't work. You  have to have innovation. You have to have leaders outside of the government.  That is that are looking after the welfare of the people. But not all dictators are  communists. Some want capitalist companies to come and create jobs.  Democracies are sometimes capitalist and sometimes socialist. Voters may  elect a leader who promises to help the poor through socialism, or voters may  prefer capitalism as a way to create more jobs. So if you put the hand the  money in the hands of the people, not always the government, the government  is going to be not always pro growth, right, but people inherently want a better  life, more opportunities, right? And they want to do more for their children. So  promoting a free but fair and environmental conscious free market capitalist  society is the way to go.