Our Nation’s Foundations – Lesson Seven: Free Enterprise
By now, if you’ve been “building” a wall graphic or virtual computer graphic representing Our Nation’s Foundations, your picture includes the bottom layer of “Bedrock” – The Natural Law of Unalienable Rights, “Bricks” – The Rule of Law in a Republic, the first Four “Pillars” of Principle: Limited Government, Individual Liberty, Personal Responsibility, and National Security.
Our final Pillar of Principle is Free Enterprise.
Add another pillar and let students place summary notes on the graphic.
Let’s Make a Deal!
As you are well aware, money makes the world go ‘round. From the very first civilizations, people realized the need to trade for things. First, they traded for actual things like food, building materials or tools. One farmer might have too many chickens. Her neighbor has too much corn but needs eggs. They can make a deal!
But it’s hard to carry eggs and corn around just in case you meet someone to trade with, so people started using substitutes for the actual items, like pebbles or beads or coins.
They agreed on what the value of everyday items should be and assigned a number of pebbles, beads or coins to represent them.
Coins could have their value stamped right on them. It was easier to pay for everything with coins until they became too heavy or bulky to carry around (and everyone could tell by your jingling pockets that you had lots of money!) So, paper money, and eventually, plastic cards were developed. Now, we can pay using an app on our phones.
Each country has their own currency, representing the value of goods their citizens can purchase. They also have their own economic systems. Some countries have tried a caste system: if you’re born rich, you and all your descendants stay rich. If you’re born poor, you and all your descendants stay poor. The country of India had this system for a long time, and it still affects their culture.
Some countries have tried Communism, an idea that supposes that everyone will share everything they have with everyone else so no one goes without what they need. Well, the faults of human nature – selfishness, laziness, and greed, to name a few – causes this system to fail.
Socialism has been tried: a system in which government controls all the money and distributes it to the populace according to need. In this system, there is no incentive to work hard for individual success, and the nation does not create much wealth to share.
Some countries in northern Europe have found limited success with modified Socialism, but citizens are severely limited in lifestyle choices, and almost all of their wages go to the government because it decides how much every person needs.
Our Founders and Framers of the Constitution adopted a Free Enterprise economic system, in keeping with their priority for maximum individual liberty.
Free Enterprise is also called Capitalism.
This economic system gives power to individuals to use their talents and abilities to create wealth by turning an idea into something to sell.
Since our laws are designed to treat everyone equally under the rule of law, everyone has the same opportunity to be financially successful.
Even people who don’t have money to start a business will borrow money to use in order to buy what they need to get their product to market – this starter money is called capital.
Millions of people from countries all over the world have come to the United States to take advantage of our Free Enterprise economy.
This economic system has made many people very rich and helped to create our nation’s wealth that enables us to provide charity all around the globe.
Profit = Incentive to Improve
Adam Smith, one of the Founders and an expert in economics, said,
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from regard to their own interest.”
A butcher, brewer or baker who gives away his goods, or sells them too cheaply will soon be out of business! He wants to make a profit to benefit himself and his family and community. All business owners want to make a profit. Profit is what is left over after you pay all your business expenses.
Less Government = More Liberty
Smith also said that government should not limit free trade. Capitalism benefits the consumer because it encourages competition, which improves business practices to make entrepreneurs more successful. Merchants and service providers must compete for our spending dollars. When individual consumers have the most power in an economic system, We the People keep more of our liberties.
Find the series of these lessons here.