Chapter 01 – Capitalism and the Role of Government
small government will have different and more cataclysmic effects today when it is not.”
Answers to Questions—Part One (p. 8)
1. The students could see the Templeton website for a variety of responses.
2. Ahmadinejad said: “We have to draw up programs based on Islamic economic thinkers. That way
we can guide people to happiness, security, justice and honesty.” (Source: Scott Peterson, “Iran’s
Ahmadinejad: Capitalism Is Dead,” The Christian Science Monitor, November 9, 2009
3. Skidelsky thinks that life is increasingly unsatisfying in that current incentives to increase wealth
undermine one’s capacity to enjoy it. In the rich countries at least, capitalism may be exhausting
Answers to Questions—Part Two (p. 16)
1. A discussion on the importance of private property rights in protecting the citizens from arbitrary
2.
a. Altruism has been defined as the unselfish regard for or devotion to the welfare of others.
b. Refer to the section titled “Man’s Rights” for this answer.
3. The students could have a discussion based on this question.
4.
a. Left to the private sector, presumably we would see more amusement parks (Disney World,
b. Presumably the market would support some such parkland, either on a profit-making basis
c. Beyond the general free market argument against compulsory taxation, one would argue that
the parks serve the interest of the middle class, who have the resources to travel to remote
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Chapter 01 – Capitalism and the Role of Government
5. A variety of free market alternatives might step in, such as competitors informing the public about
dangers. A firm’s own self-interest might militate against the production of dangerous products.
6-9. The students could have discussions based on these questions.
10. Self-reliance would be strengthened, since public sector assistance would not exist. So some of
the poor might be motivated to exert more effort to care for themselves. Barter arrangements
11. The students could have a discussion based on this question. They could also discuss about
whether this trend would lead to a more isolated society and a further break down in community.
12. New York City officials announced that the payments would be discontinued in August 2010 and
that they had no specific plans to continue the program using public money. However, they do
Mexico, Brazil and other nations use a similar approach with more successful results, particularly
over the longer term. Some confusion and mistrust slowed the New York City program. Its
Answers to Questions—Parts Three and Four (p. 29)
1.
a. Soros seems to equate market fundamentalism with religious fundamentalism. Extreme and
single-minded fidelity to market principles will, he believes, undermine the general welfare.
b. The students could have a discussion based on this question.
2. Business does not regulate itself in the public interest—both fraud and criminality may be
rewarded with profits. See, Arthur Schlesinger, Jr., “Government Isn’t the Root of All Evil,” Wall
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Chapter 01 – Capitalism and the Role of Government
3.
a. The students could have a discussion based on this question.
b. Assuming Americans are more tolerant of unemployment, some of the reasons would be as
follows: (1) Broadly, Americans take an individualistic, capitalistic view of life where personal
accomplishment, hard work, profit seeking, etc., are highly esteemed. The Swedes have a
4. Students’ opinions will vary. Some students may agree and say that it would slow the world’s
economic growth and innovation over a period of time if the U.S. adopted the Scandinavian
“cuddly capitalism.” Some of them may also say that technological advances, in an economic
5. The students could have a discussion based on this question.
6.
a. The students could have a discussion based on this question.
b. Scialabba says that inequality is not inherently unjust, rather that what “is immoral is not that
some people have too much but that other people have too little; the one is not always the
7. The students could have a discussion based on this question. The cited commentator viewed
8. Students’ opinions will vary. Apart from increasing companies’ administrative costs, the fat tax that
was introduced in Denmark made people cross the border to satisfy their unhealthy eating habits.
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Chapter 01 – Capitalism and the Role of Government
Answers to Questions—Part Five (p. 38)
1. Students’ opinions will vary. Bremmer seems to say that state capitalism is likely to have a shorter
lifespan than democratic capitalism. He says state capitalism has limited appeal to the masses
2.
a. Students’ opinions will vary.
b. Students’ opinions will vary. Cohen thinks not: “But some new balance between state and
market, one that provides toilets as well as cellphones, awaits definition. Dignity should not
3.
a. The students could have a discussion based on this question.
b. Students’ answers will vary. Some of them may disagree and take William Bennett’s view
that the economic market of profit maximization may result in devaluing of qualities, such as
4. Students’ opinions will vary. Prime Minister David Cameron’s remarks to the February 5, 2011
Munich Security Conference provide some insight from the conservative perspective: In the UK,
some young men find it hard to identify with the traditional Islam practiced at home by their
Answers to Chapter Questions (p. 39)
1. The students could have a discussion based on this question. It might be useful to add to the
2.
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Chapter 01 – Capitalism and the Role of Government
a. Students’ answers will vary. They may quote what Samuelson said: “Companies may
mistreat workers, cheat consumers or ruin the environment.” “Also people often find the free
b. A 2007 Harris Poll found less than 50 percent of adults in the six countries surveyed say
capitalism is the best economic system. (Great Britain, 25%; France, 34%; Italy, 36%; Spain
c. In the five European countries surveyed, less than 20 percent of the public think their
3.
a. Students answers’ will vary. They could use the following points in their answers—“Nearly all
additional wealth created in the USA since 1989 has gone to people 55 and older, according
b. This is an opportunity for students to talk about what they feel they have “earned,” and where
they feel their lives fall short of their own standards and of societal expectations.
4.
a. Students’ answers will vary. They may mention the following—the Supplemental Nutrition
b. Students’ answers will vary. Some of them may feel that it is unfair to pay more taxes
5.
a. Thurow argues that the current economic system is no longer congruent with traditional
nuclear family values. For example, 32% of all men from 25 to 34 earn less than the amount
b. Spock argues that it is a result of America’s heritage. “[T]he U.S. was made up of pioneering
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Chapter 01 – Capitalism and the Role of Government
c. Students’ answers will vary. They could have a discussion based on this question.
6. Wood cites research findings pointing to lack of health insurance, big disparities in income and
7. The students could have a discussion based on this question.
8.
a. Students’ opinions will vary. Proponents in Nevada claim prostitution currently operates
b. For libertarians, any diminution of personal freedom for adults not willfully causing harm to
others entails a risk to fundamental American principles, but state advocates point to the
9. See David Warsh, “How Selfish Are People—Really?” Harvard Business Review, May-June 1989,
p. 26. In reviewing Robert Frank’s book, Passions Within Reason: The Strategic Role of the
Emotions (New York: Norton & Company, 1988), Warsh summarizes Frank’s argument that
10. Students’ answers will vary. They may say that the reasons for this gap include—labor market
barriers to women have been lowered, higher incidence of school behavioral and disciplinary
11.
a. Evidence suggests that mothers are likely to show more responsibility than fathers in
spending. Thus, some agencies are directing aid preponderantly toward women.
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Chapter 01 – Capitalism and the Role of Government
b & c. Students’ opinions will vary.
12.
a. The students could have a discussion based on this question. Friedman is pointing out that
b. The students could have a discussion based on this question.
13.
a. Students’ answers will vary. Some of them may say that America’s free market economy will
b. Students’ answers will vary. Students may say that there should be a balance between
14. The students could have a discussion based on this question.
15.
a. Students’ answers will vary for the second part of the question. The United States, Germany
b. The United States is the most admired nation with the best overall brand. The U.S. ranks
16. The students could have a discussion based on this question.
17.
a. The students could have a discussion based on this question.
b. Collectivism would encourage the eradication of the “artificial” individuality acquired primarily
18. The students could have discussions based on these questions.
19. The students could have discussions based on these questions.
20. See Gary S. Becker, “Why Not Let Immigrants Pay for Speedy Entry?” Business Week, March 2,
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Chapter 01 – Capitalism and the Role of Government
21. The students could have a discussion based on this question.
Supplementary Materials
I. Ayn Rand (p. 9)
Should you or your students wish to read more of Ayn Rand’s views, a collection of her essays, The
Virtue of Selfishness, and her novels, Atlas Shrugged and The Fountainhead, ordinarily are well
received by mature students. Barbara Branden’s biography, The Passion of Ayn Rand (New York:
Doubleday, 1986), provides an entertaining picture of the novelist/philosopher. Of course, Rand
(1905-1982) was dismissed by her critics as an ideologue and an arbitrary “pop” philosopher. If
preferred, the instructor could direct the students’ attention to Milton Friedman and other free market
theorists.
Selected Bibliography
Eugene Carlson, “Privatization Lets Small Firms Manage Everything from Libraries to Golf Courses,”
The Wall Street Journal, April 2, 1991, p. B1.
Central Intelligence Agency, “Global Trends 2015: A Dialogue about the Future with Nongovernment
Experts,” NIC 2000-02 (December 2000)
Barbara Ehrenreich, Bait and Switch: The (Futile) Pursuit of the American Dream (Metropolitan Books
2005).
Ted Fishman, China, Inc.: How the Rise of the Next Superpower Challenges America and the World
(Scribner 2005).
Michael Goldman, Imperial Nature: The World Bank and Struggles for Social Justice in the Age of
Globalization (Yale Agrarian Studies Series 2005).
Victoria De Grazia, Irresistible Empire: America’s Advance through Twentieth-Century Europe
(Belknap Press 2005).
Thomas L. Friedman, Longitudes and Attitudes (Farrar, Straus & Giroux 2002).
Thomas K. Grose, “Labor, Social Costs Taking Toll on Governments,” USA Today, Sept. 19, 1996, p.
1B.
George Dennis O’Brien, “The Christian Assault on Capitalism,” Fortune, December 8, 1986, p. 181.
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Chapter 01 – Capitalism and the Role of Government
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