The USA has a mixed economy. That means that it works following an economic system that has the features of both socialism and capitalism. A mixed economic system is great for the protection of private property and it also enables an economic level that has freedom for using the capital. Alongside, it allows the government to intervene in all economic activities to achieve social aims and things for the public good.
Why is the US economic system highly depending on their economy? Here are some key points about the US’s Economic system.
It's quite clear that the government of the USA has always taken part in economic affairs all around the nation. Considering history shows that most services began coming under the influence or direct public sector control. In US history, some periods showed that it was closer to being a true free-market economy that needs the private sector or individuals as unfettered in the economic actions, behaviors, and decisions.
A true or absolute free market economy says that all property should be owned by private individuals and each of the services and goods should be provided by private individuals. Fluctuation in prices is allowed according to the supply and demand rule. Each of the transactions should be voluntary, not restricted or compelled by the government. This kind of system is also known as Pure Capitalism or Laissez-faire capitalism.
Contrariwise, a mixed economic system features the characters of both free market and central economic controls by the government. There are plenty of ways in which market economics get changed in a mixed economic system. Government can place restrictions for regulation on voluntary transactions in the private market.
Also, private establishments may need government-granted licenses for some particular activities. In fact, some activities might get banned. It might be possible that governments also own public property or provide public services and make use of tax policies or subsidies for changing the price signals in the market. Many private transactions are allowed in a mixed economic system. However, they are only under the conditions that address government goals.
The government of the USA controls or partially controls a lot of services and goods. This includes courts, roads, education, postal delivery, and hospital care. Also, it provides subsidies to agricultural producers, financial companies, oil companies and utility firms. For instance, private individuals are not legally able to provide or buy certain types of things like haggis, raw milk in some states, cocaine, and most types of cigarettes. And the rest of the products face a lot of taxes to discourage the use of them.
In the United States, private businesses need to register with government agencies. Several professional types may only operate with government licenses. This includes auctioneers, funeral attendants, makeup artists, investigators, hairstylists, financial advisors, and real estate agents.
Most of the business types and each of the economic form exchanges gets affected by the US government policy. Also, the FDA needs to approve all the consumable medicines and foods before they can be sold. Therefore, they need producers to produce every particular disclaimer.
Advertisements of goods and services from certain businesses only comply with the federal trade commission. The entire process of employment should get complied with the FLSA, ERISA, and other organizations like DOL.
The government of the USA has a role in the economy with financial policies too. This influences business production and inflation. The Federal Reserve is charged with the policy of controlling money. Also, congress and the executive branch handle fiscal policy.
The economic system is unique in the United States, so it is simply a mixed system that has resulted in a stable economy. However, there are still a list of laws and regulations alongside other impediments to doing complete voluntary transactions in the economy catalogue in the Federal Register of the USA. There was a time when the public sector had a potential impact on the USA’s economy but today they are one of many factors.
