Roots
The
America's Economic System
Capitalism
A system where private businesses and individuals own and sell goods
Free Market
An economic system based on supply and demand, the individuals are the ones making economic decisions. There are only private transactions, and the government generally stays out of the economy. They are allowed to provide laws and regulations to prevent monopolies and fraud, but they cannot coerce people into making economic decisions.
The Rational Market Theory
Prices reflect information, and analysis cannot produce excess returns consistently. Stocks will be traded at their value, so investors cannot buy unvalued stock or sell stock for more than its worth.
This is the watered down version of what components America's economic system is based on. When Capitalism functions correctly it creates a system where the people are in control of their own economy. However, the lack of government control can sometimes lead to corruption within the system, as shown by the Great Recession. Often it is the less affluent Americans that fall susceptible to the corruption and face the most consequences. Capitalism runs on inequity because there are producers and consumers, so there always has to be a gap between economic classes for the system to work.
MISCONCEPTIONS
The Prosperity Gospel: the wealthy are blessed by God, while the poor are not loved by God.
THIS IS A MYTH
Social structures have been put in place to inhibit certain groups from accessing resources needed to prosper, financial literacy programs are one of these necessary resources. The system does not need to be changed, people just need to be educated on the system. If more Americans understood the system, they would be less vulnerable to the prying actions of financial companies, but in turn the companies would make less money.
FACTS
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FIGURES
America's financial literacy is 57%. Based on data found by the National Financial Capability Study, white Americans would score 12% higher than minorities on a financial literacy test. This statistic is interesting because Minorities have more access to financial education, and more minorities participate in these programs.
Why are minorities more vulnerable to fluctuations in the financial market?
America has an extensive amount of institutionalized racism within their systems, there are not many sound opportunities for minorities to gain success in the financial or social spheres. After years of this inequity the racial wage gap has become a major hurdle for many minorities to overcome as they try to find their place in American society. Although this is true, the racial and wage gad and financial literacy act independently of each other, so financial education will not have major positive effects on narrowing the gap.