Economic_Problem_That_a_Sole_Survivor_of_a_Nuclear_War_Faces

Life of the sole survivor would be severely disrupted. The medical care system would be overburdened providing intensive treatment to fallout victims, resulting in degraded regular, acute, chronic or preventive care. Support systems such as insurance and medical records would likely be in chaos, or at best in serious disarray, with some drugs in short supply. Food production and distribution systems, as well as the banking system, would be severely disrupted. The survivor is likely to feel threatened and disoriented. Massive urban evacuation and prolonged relocation could provoke social tension, severely taxing limited social services. Choices to be made regarding evacuation and future aid to rebuild the post-attack economy could become politically explosive. Effects would extend beyond the industrial and food exports would decrease, or cease, tilting the balance of payments, destabilizing the dollar, and ultimately affecting other currencies. Economic system An economic system is the structure of production, allocation of economic inputs, distribution of economic outputs, and consumption of goods and services in an economy. It is a set of institutions and their social relations. Alternatively, it is the set of principles by which problems of economics are addressed, such as the economic problem of scarcity through allocation of finite productive resources. An economic system is composed of people and institutions, including their relationships to productive resources, such as through the convention of property. Examples of contemporary economic systems include capitalist systems, socialist systems, and mixed economies. An economic system Alternatively, 'economic' refers to the organizational arrangements and process through which a society makes its production and consumption decisions. In creating and modifying its economic system, each society chooses among alternative objectives and alternative decision modes. Many objectives may be seen as desirable, like efficiency, growth, liberty, and equality. Basic types of Economic systems The basic and general economic systems are: • Market economy (the basis for several "hands off" systems, such as pure capitalism) • Mixed economy (a compromising system that incorporates some aspects of the market approach as well as some aspects of the planned approach) • Planned economy (the basis for several "hands on" systems, such as state socialism) • Traditional economy (a generic term for older economic systems) • Participatory economics (a system where the production and distribution of goods is guided by public participation) • Gift economy (where an exchange is made without any explicit agreement for immediate or future rewards) • Barter economy(where goods and services are directly exchanged for other goods or services) Market economy A market economy is an economy in which the prices of goods and services are determined in a free price system. This is often contrasted with a fixed price system. Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed economies, where the price system is under some state control or at least heavily regulated. In mixed economies, state-directed economic planning is not extensive enough to constitute a planned economy. In the real world, market economies do not exist in pure form, as societies and governments regulate them to varying degrees rather than allow self-regulation by market forces. The term free-market economy is sometimes used synonymously with market economy, but, as Ludwig Erhard once pointed out, this does not preclude an economy from having social attributes opposed to a laissez-faire system. Like many economies, the market economy depends on the division of labor. Some think prices in a market economy are set by supply and demand. • Capitalism Capitalism generally refers to an economic system in which the means of production are all or mostly privately owned and operated for profit, and in which investments, distribution, income, and pricing of goods and services are determined through the operation of a market economy. It is usually considered to involve the right of individuals and groups of individuals acting as "legal persons" or corporations to trade capital goods, labor, land and money. Laissez-faire Laissez-faire is synonymous with what was referred to as strict capitalist free market economy during the early and mid-19th century as an ideal to achieve. It is generally understood that the necessary components for the functioning of an idealized free market include the complete absence of government regulation, subsidies, artificial price pressures and government-granted monopolies (usually classified as coercive monopoly by free market advocates) and no taxes or tariffs other than what is necessary for the government to provide protection from coercion and theft and maintaining peace, and property rights. Milton Friedman and Friedrich Hayek stated that economic freedom is a necessary condition for the creation and sustainability of civil and political freedoms. They believed that this economic freedom can only be achieved in a market-oriented economy, specifically a free market economy. They do believe, however, that sufficient economic freedom can be achieved in economies with functioning markets through price mechanisms and private property rights. They believe that the more economic freedom that is available, the more civil and political freedoms a society will enjoy. Friedman states: • "Economic freedom is simply a requisite for political freedom. By enabling people to cooperate with one another without coercion or central direction it reduces the area over which political power is exercised" Friedman, Milton and Rose Friedman, Free to Choose: A Personal Statement, Harcourt Brace Jovanovich, 1980, p. 2-3 • "Capitalism is a necessary condition for political freedom" Capitalism and freedom Studies by the Canadian libertarian think tank Fraser Institute and the American conservative think tank Heritage Foundation state that there is a relationship between economic freedom and political and civil freedoms to the extent claimed by Friedrich von Hayek. They agree with Hayek that those countries which restrict economic freedom ultimately restrict civil and political freedoms. Generally market economies are bottom-up in decision-making as consumers convey information to producers through prices paid in market transactions. All states today have some form of control over the market that removes the free and unrestricted direction of resources from consumers and prices such as tariffs and corporate subsidies. Milton Friedman and many other micro economists believe that these forms of intervention provide incentives for resources to be misused and wasted, producing products society may not value as much as a product that is valued as a result of these restrictions. Market socialism Market socialism refers to various economic systems in which the state owns the economic institutions and major industries but operates them according to the rules of supply and demand. In a traditional market socialist economy, prices would be determined by a government planning ministry, and enterprises would either be state-owned or cooperatively-owned and managed by their employees. The distinguishing feature between non-market socialism and market socialism is the existence of a market for the means of production, and the criteria of profitability for public enterprises; which can either be used to reinvest in production or finance government and social services directly. Libertarian socialists and left-anarchists often promote a form of market socialism in which enterprises are owned and managed cooperatively by the workers so that the profits directly remunerate the employee-owners. These cooperative enterprises would compete with each other in the same way private companies compete in a capitalist market. An example would be Mutualism (economic theory). [ http://en.wikipedia.org/wiki/Market_economy Mixed economy A mixed economy is an economy that includes a variety of private and public control, reflecting characteristics of both capitalism and socialism.[1] Most mixed economies can be described as market economies with strong regulatory oversight, in addition to having a variety of government-sponsored aspects. See elements of a mixed economy. There is not one single definition for a mixed economy,[2] but the definitions always involve a degree of private economic freedom mixed with a degree of government regulation of markets. The relative strength or weakness of each component in the national economy can vary greatly between countries. Economies ranging from the United States[3] to Cuba[4] have been termed mixed economies. The economic freedom side includes privately owned industry for reasons including individual freedom, economic efficiency (most especially the allocative efficiency provided by the invisible hand of markets), and the incentive to innovate provided by competition. The government regulation side addresses concerns that the private sector cannot be (or at least has never yet been) well equipped to address, such as environmental protection, maintenance of employment standards, a standardized welfare system, and maintenance of competition. In some mixed economies, it even includes various degrees of centralized economic planning, that is, state ownership of some of the means of production for national or social objectives.[citation needed] Mixed economies as an economic ideal are supported by people of various political persuasions, typically centre-left and centre-right, such as social democrats[5] or Christian democrats. Supporters view mixed economies as a compromise between classic socialism and pure laissez-faire capitalism. . Planned economy Planned economy is an economic system in which the state directs the economy.[1] It is an economic system in which the central government controls industry such that it makes major decisions regarding the production and distribution of goods and services.[2] Its most extensive form is referred to as a command economy,[3] centrally planned economy, or command and control economy.[4] In such economies, central economic planning by the state or government controls all major sectors of the economy and formulates all decisions about the use of resources and the distribution of output.[5] Planners decide what should be produced and direct lower-level enterprises to produce those goods in accordance with national and social objectives.[6] Planned economies are in contrast to unplanned economies, i.e. the market economy, where production, distribution, pricing, and investment decisions are made by the private owners of the factories of production based upon their individual interests rather than upon a macroeconomic plan. Less extensive forms of planned economies include those that use indicative planning, in which the state employs "influence, subsidies, grants, and taxes, but does not compel." This latter is sometimes referred to as a "planned market economy." A planned economy may consist of state-owned enterprises, private enterprises directed by the state, or a combination of both. Though "planned economy" and "command economy" are often used as synonyms, some make the distinction that under a command economy, the means of production are publicly owned. That is, a planned economy is "an economic system in which the government controls and regulates production, distribution, prices, etc." But a command economy, while also having this type of regulation, necessarily has substantial public ownership of industry. Therefore, command economies are planned economies, but not necessarily the reverse. • Another key difference is that command economies are strictly authoritarian in nature, whereas some forms of economic planning, such as indicative planning, direct the economy through incentive-based methods. Economic planning can be practiced in a decentralized manner through different government authorities. For example, in some predominately market-oriented and mixed economies, the state utilizes economic planning in strategic industries such as the aerospace industry. Another example of this is the utilization of dirigisme, both of which were practiced in France and Great Britain after the Second World War. Swedish public housing models were planned by the government in a similar fashion as urban planning. Mixed economies usually employ macroeconomic planning, while micro-economic affairs are left to the market and price system. Decentrally Planned economy A decentrally planned economy is an economy where members of a society, acting with equal economic power, democratically plan economic activity. Advantages of economic planning Stability Long-term infrastructure investment can be made without fear of a market downturn (or loss of confidence) leading to abandonment of a project. This is especially important where returns are risky (e.g. fusion reactor technology) or where the return is diffuse (e.g. immunization programs or public education). Meeting collective objectives Planned economies may be intended to serve collective rather than individual needs: under such a system, rewards, whether wages or perquisites, are to be distributed according to the value that the state ascribes to the service performed. A planned economy eliminates the individual profit motives as the driving force of production and places it in the hands of the state planners to determine what is the appropriate production of different sets of goods. The government can harness land, labor, and capital to serve the economic objectives of the state. Consumer demand can be restrained in favor of greater capital investment for economic development in a desired pattern. The state can begin building a heavy industry at once in an underdeveloped economy without waiting years for capital to accumulate through the expansion of light industry, and without reliance on external financing. This is what happened in the Soviet Union during the 1930s when the government forced the share of GNP dedicated to private consumption from 80 percent to 50.0 percent. As a result, the Soviet Union experienced massive growth in heavy industry. Comparison with capitalist corporations Taken as a whole, a centrally planned economy would attempt to substitute a number of firms with a single firm for an entire economy. As such, the stability of a planned economy has implications with the firm. After all, most corporations are essentially 'centrally planned economies aside from some token intra-corporate pricing. As pointed out by Kenneth Arrow and others, the existence of firms in free markets shows that there is a need for firms in free markets; opponents of planned economies would simply argue that there is no need for a sole firm for the entire economy. [edit] Advantages over market economies An advantage of a planned economy, one which was among the most important for socialist economists of the early 20th century, is that it is not subject to major pitfalls of market economies and marked-oriented mixed economies. A planned economy, in theory, does not suffer from business cycles; it does not experience crises of overproduction such as the one that was believed to have contributed to the Great Depression. From the modern perspective, The other aspect is that a centrally planned economy can provide public goods which would not have been available at all, or might require explicit government provision, in a market economy, resulting in a mixed economy. In a mixed economy, the government would have to achieve this goal through taxation or inflation. In a planned economy, state planners would allocate state resources toward public goods and state projects. Disadvantages of economic planning Inefficient resource distribution: surplus and shortage Critics of planned economies argue that planners cannot detect consumer preferences, shortages, and surpluses with sufficient accuracy and therefore cannot efficiently co-ordinate production (in a market economy, a free price system is intended to serve this purpose). For example, even though the Soviet Union had its own passenger car manufacturing industry going back to 1940's, it was impossible for a Soviet citizen to simply walk into a store and buy a car—the entire output of all car manufacturing plants was allocated for years in advance. From the modern viewpoint, such a shortage indicates a mismatch between supply and demand—suggesting that planners have misjudged the demand for the product, the equilibrium price, or both. An imbalance, which would have been corrected naturally in a matter of years in a free-market economy, persisted for decades, while central planners turned a blind eye on it. This difficulty was first noted by economist Ludwig von Mises, who called it the "economic calculation problem". Economist János Kornai developed this into a shortage economy theory (advocates could claim that shortages were not primarily caused by lack of supply). A problem of surpluses exists. Surpluses indicate a waste of labour and materials that could have been applied to more pressing needs of society. Critics of central planning say that a market economy prevents long-term surpluses because the operation of supply and demand causes the price to sink when supply begins exceeding demand, indicating to producers to stop production or face losses. This frees resources to be applied to satisfy short-term shortages of other commodities, as determined by their rising prices as demand begins exceeding supply. It is argued that this "invisible hand" prevents long-term shortages and surpluses and allows maximum efficiency in satisfying the wants of consumers. Critics argue that since in a planned economy prices are not allowed to float freely, there is no accurate mechanism to determine what is being produced in unnecessarily large amounts and what is being produced in insufficient amounts. They argue that efficiency is best achieved through a market economy where individual producers each make their own production decisions based on their own profit motive. In particular, it is possible to create unprofitable but socially useful goods within the context of a market economy. For example, one could produce a new drug by having the government collect taxes and then spend the money for the social good.It is possible to see things of value being produced by the state taxing and using those funds to undertake projects which are believed to be social goods, but not to see what social goods have not been produced due to wealth taken out of the hands of those who would have invested and spent their money in other ways according to their own goals. These opponents of central planning argue that the only way to determine what society actually wants is by allowing private enterprise to use their resources in competing to meet the needs of consumers, rather those taking resources away and allowing government to direct investment without responding to market signals. According to Tibor R. Machan, "Without a market in which allocations can be made in obedience to the law of supply and demand, it is difficult or impossible to funnel resources with respect to actual human preferences and goals."[19] If the government in question is democratic, democratically-determined social priorities may be considered legitimate social objectives in which the government is justified in intervening in the economy. It must be noted that to date, most if not all countries employing command economies have been dictatorships or oligarchies – few or none were democracies. Many democratic nations, however, have a mixed economy, where the government intervenes to a certain extent and in certain aspects of the economy, although other aspects of the economy are left to the free market. [edit] Suppression of economic democracy and self-management Central planning is also criticized by elements of the radical left. Libertarian socialist economist Robin Hahnel notes that, even if central planning overcame its inherent inhibitions of incentives and innovation, it would nevertheless be unable to maximize economic democracy and self-management, which he believes are concepts that are more intellectually coherent, consistent and just than mainstream notions of economic freedom.[20] As Hahnel explains, "Combined with a more democratic political system, and redone to closer approximate a best case version, centrally planned economies no doubt would have performed better. But they could never have delivered economic self-management, they would always have been slow to innovate as apathy and frustration took their inevitable toll, and they would always have been susceptible to growing inequities and inefficiencies as the effects of differential economic power grew. Under central planning neither planners, managers, nor workers had incentives to promote the social economic interest. Nor did impeding markets for final goods to the planning system enfranchise consumers in meaningful ways. But central planning would have been incompatible with economic democracy even if it had overcome its information and incentive liabilities. And the truth is that it survived as long as it did only because it was propped up by unprecedented totalitarian political power."[20] Without economic democracy there can be troubles with the flow of knowledge as is shown with the initiative for backyard furnaces and other efforts in the Great Leap Forward There are four main types of economic systems present in the world: the traditional economy, the market economy, the command economy, and the mixed economy. But there are also unlimited amounts of variations of these systems. A traditional economy is an economy that answers the three questions based on their social customs and how the society has dealt with these questions in the past. A country's customs can differ greatly to that of a neighbouring country so traditional economies vary from one another. A market economy is the type of economy that the United States has and these questions are answered in the marketplace by the interaction of buyers and sellers. For example, the question of what to produce may be based on what trend is popular right now. The producer would create a product that they think would sell well to the public in hopes to make a profit. The question of how to produce is usually based on the producer's choice. They might decide to produce a product with more workers or they might decide to produce it more with machines and computers to save on labour costs. The question involving for whom to produce is based on the buyer who decides what they want or need and what price they are willing to pay for it. A market economy is great for motivating workers to work harder because they are only paid based on what they do. A worker can increase their income or profit by working harder and this chance to profit motivates them. A command economy is an economy where these questions are all answered by the government. Rather than giving individuals the chance to decide what they want or need, the government decides these questions for the country. This type of economy is difficult for the individual because it is impossible for the government to know exactly what is best for each and every citizen. Also, command economies don't help with their workers' motivation because everyone is given the same amount of goods and the same standard of living. A hard working citizen would not be given a chance to benefit from their extra work because they cannot increase their standard of living any greater than it currently is and they will make just as much as a person who exerts little or no effort. A mixed economy is an economic system that answers the three questions both in the marketplace and in the government. Although the United States government plays a role in our economy, a mixed economy usually involves producers working closer with the government than they do in the United States so the US economic system is still a market economy. The economic system a country has is based on what is best for the country. One person might feel a market economy is best for one country but it may not suit another. Determining how an economy works can help you make better decisions as an individual and participate more in issues involving the economy as a whole. And becoming an economically-effective citizen helps you benefit the entire country. http://www.buckinvestor.com/basics/economic_systems.shtml http://www.shmoop.com/we-real-cool/