Characteristics of Mixed Capitalism:
1.Co-existence of Private and Public Sectors;
Both sectors function in a mixed economy. In a private sector, it is owned by private individuals and profit is the primary motive. Public sectors are owned/managed by the government and they have a profit motive along with the promotion of social welfare. Ex: retail stores, credit unions and local business like White Cottage pizza for private sectors. Military, police, infrastructure, and public education/transit for the public sector.
2.Regulation of Private Sector:
Government has control and regulation over private sector industries.
Regulation helps prevent monopolies from forming and protect investors by checking the quality of a service and reduce asymmetry of information. For example, the Inerstate Commerce Act of 1887 required railroads to publish rates and the first legislation to regulate corporations.
Economic structure is based on the planning of the government. Planning commission decides the objectives, targets, and the allocation of resources, etc. ex: communist countries North Korea and Cuba enact this plan through the government controlling the allocation and distribution of goods and services. Planning creates independent goals.
4.Reduction of Inequalities of Income and Wealth:
Government takes action/steps to reduce the inequalities of income and wealth. Example: Obamacare or the affordable care act (ACA) of 2010 is a health care reform law that expands and improves access to care and curb spending through regulations and taxes.
5.Provision of Social Security:
Government provides Social Security. Example: whether you're in retirement, disabled, dependents or survivors, you qualify for insurance that helps and citizens get benefits in addition to Medicare
6.Existence of Joint Sector
Joint sector is where the government and private individuals establish an organization jointly by contributing the necessary capital.
Positives of Mixed Capitalism:
Private property with government regulation to prevent business corruption for fair prices for consumers.
The Sherman antitrust act is the first law to restrict monopolistic trusts and business combinations; extended by the Clayton Antitrust Act of 1914.
Meat Inspection Act 1906: largely in reaction to Upton Sinclair's The Jungle, the law set strict standards of cleanliness in the meatpacking industry.
Pure food and drug act: Passed in 1906, the first law to regulate manufacturing of food and medicines; prohibited dangerous additives and inaccurate labeling.
Analysis: A business has the freedom and privacy but the government makes certain they are not part of unethical activities that may harm consumers or environment.
2.) Tax cuts for the benefit of the lower class to make life more affordable.
Former president, George W. Bush’s tax cuts moved the economy out of the recession.
Ireland’s recent tax cuts have improved the economy and their overall way of life.
Different types of tax cuts, for example, expand the tax bracket to15%
Factual evidence: Tax cuts main purpose to benefit the middle and lower class for tax relief and stimulate the economy.
3.) Freedom of enterprise and profit result in motivation.
Both the consumers and corporations benefit from competition between public and private sectors that increase efficiency, innovation and productivity.
Example: IKEA is innovating their products for a more efficient way of shipping while prices continue to decrease benefiting both the consumers and corporations.
Negatives of Mixed Capitalism:
The negative aspect of a mixed capitalistic society is that the government leans more to government control which affects privately owned businesses because it creates less work motivation because the company can't have the full potential it would have if it was a free market (fee.org). Companies would not be able to use ideas to have their company thrive to their full extent because of government regulations and with the government interfering in the business.
It also pays less attention to individual freedoms. This can diminish the workers confidence which could affect innovative ideas so many people won't be working to their full extent (ww2.gsu.edu). This means the work ethic would differentiate because everyone is getting the same wages and one person could be working hard while the other could be doing nothing and they would still be getting paid the same.
So another reason is monopoly power. Monopoly power is when a single seller controls market basically. One company that becomes the most popular can have a great affect on production because some companies might go out of business because that one monopoly company is thriving and buyers are purchasing more of their products instead of others.The government in a mixed capitalism is is trying to supress this from happening so the market can become more even. So the government is taking away the full potential of a company.(thebalance.com)
Sherman Antitrust Act- government has no control over private businesses which in a mixed capitalism they are trying to go against the act to control market
According to the heritage foundation, government regulation messes with market.
Heritage foundation says the government regulation on companies affect the production of companies which companies can go out of business
Negatives of Democratic Socialism:
1. Democratic Socialism leads to primitive taxation. This means that there will high taxes.
Ex.) In France, Hollande set out a 75% tax rate
-People of France has said that the tax rate is unworkable and it puts out more pain than good. This hurts middle/lower class families and those with a set income. That's because if they are being taxed higher, the less money that they will be able to spend and provide for their families.
2. Big Economic Deficits and will usually not have a large surplus. With big economic deficits, it will need to be paidd off so there needs to be a way to create more revenue which would lead to taxing the people more.
Ex.) In Canada, under Chretien and Martin, the deficit was $42 billion in fiscal 1993-1994.
-Due to the big government spending in a socialist economy, it creates a huge economic deficits without a surplus. If there is big deficits, debt will be even greater and there needs to be a way of creating more revenue to pay off the debt which may lead to taxing the people with higher rates.
3. High unemployment rates
Ex.) Unemployment in France is 10% and people who are trying to find work even with skill cannot find a job when the economy is down. Finland is another socialist country and the unemployment rate is 9.1%.
-People who are seeking to find jobs are unable to find one which leads to the high unemployment rates.