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Free market economy
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The steady stream of current world events provides us with the signs to be read if we only take the time and the intention to pay attention to those lessons. The economic view provides a robust language for understanding the basic physical reality of scarcity, and the varied human beliefs and responses we take as we attempt to deal with that scarcity. As Smith and Ricardo teach us, the subtle and important understanding lies in the space between what human desires dictate in the personal scale, in the short run; and what consequences play out on the grand scale, in the long run. In this paper we look at the proxy effects of policies intended by governments to forge policies in the short run, as compared to the inevitable effects that flow from these policies in the long run.
Our primary tools are the Index of Economic Freedom calculated annually by The Heritage Foundation and the Wall Street Journal, and basic quality of life measures from the CIA World Factbook. Because the Heritage index has gained some criticism as biased, or retro-fitted to a cause, we evaluate it by comparison with other indices: The Fraser Institute, a Canadian based libertarian organization; The Ease of Doing Business Index, created by the World Bank; and the Freedom in the World Index, by the liberal organization Freedom House, primarily focused on political rights and civil liberties.
For our section of study, we selected five countries which range the economic freedom index: Hong Kong, United States, Italy, India, and Haiti. For comparison purposes, and to provide additional points to graph, we chose five additional countries which are equidistant, between the others (or in the case of Burundi, between Haiti and the bottom rank). The five inter-com...
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...venues as percentage of GDP: and Government Spending; measuring government expenditures as percentage of GDP. These factors correlate very weakly, ranging close to zero, and slightly negative in some cases. We are forced to admit, that conservative and libertarian arguments against the onerous burden of taxation and government malinvestment show little empirical evidence at least within this model. This does not rule out valid arguments on moral grounds, and it is possible that this index and the correlation with our chosen proxies is too blunt an instrument to measure the negative effects on government taxation and spending.
Having established our premises, we now continue with specific examples of the economic effects on five selected countries. The appended graphs show the correlations between Economic Freedom and GDP per capita, and life expectancy at birth.
Foner focuses, specifically, on how the definition of liberty has been molded over time. He describes how other factors played a role in the change of liberty using three interrelated themes. The first theme, as he describes it, covers the dimensions or meanings of freedom. The dimensions include “political freedom, or the right to participate in public affairs… civil liberties, or rights that individuals can assert against authority…[and] moral or ‘Christian’ ideal of freedom,” the freedom to act morally or ethically good (Foner xvii). It also includes personal freedom or being able to make individual choices free from coercion, and “economic freedom…[which covers how] the kinds of economic relations constitute freedom for… [individual’s working lives]” (Foner xviii). All these dimensions are looked at individually as they play a role in reshaping the definition of freedom or liberty.
Since the resurgence of unregulated capitalism in the late 20th century, social inequalities have grown significantly, with one percent of the most powerful countries attaining more wealth than half the world (Dunklin 2). Canada’s income gap has also risen, exacerbating morbidity and mortality (Bryant 47). However, the extent that government should reduce social inequities is controversial in a liberal democracy, which prioritizes economic freedom. That being said, social inequalities may lead to wealthier individuals gaining an advantage in policy making (Bryant 54; Rein 63), undermining the liberal democratic value of political equality. Moreover, the ideal of economic freedom is shrinking in today’s global economy, which exhibits massive enterprises stifling competition and creating economic instability (Foster 2). In light of these issues, the aim of this essay is to detail how unregulated capitalism detracts from a liberal democracy by undermining political equality and economic freedom.
Despite its size, only 190 pages, the authors address the basic concepts of economics while also applying those politically and for personal finance decision making. Those basic concepts include scarcity, gains from trade, marginal decision-making, profit management, income growth, and Adam Smith’s invisible hand theories are all discussed within the first part of the book; allowing readers to understanding the concepts, Gwartney applies the same concepts to the creation of wealth and the importance of competition, private property, open trade, monetary stability, and lower taxes. This book educates its audience by evaluating our economy and government mechanisms without the overpowering display of charts, formulas, and graphs; which you would typically see in a textbook allow...
If we were to measure freedom by standards of nutrition, education and self-government, we might rank the United States and certain nations of Western Europe very high. But this would not be fair to other nations where education had become widespread only in the last twenty years. In many nations, a generation ago, nine out of ten of the people could not read or write. Russia, for example, was changed from an illiterate to a literate nation within one generation and, in the process, Russia's appreciation of freedom was enormously enhanced. In China, the increase during the past thirty years in the ability of the people to read and write has been matched by their increased interest in real liberty.
These entire factors can eventually open up all the possibilities for more and more emerging adults to experience life and explore their independence, as countries become wealthier chances are that more young people can go to school and move in to a dorm and have a semi independent lifestyle until they reach adulthood. This can benefit our future generations to come and potentially increase the life expectancy and become achievable adults that live a longer and prosperous life. This will be a new evolution for the young people now and the young people to come, this means more educated people, which call change the way our jobs, economy, and development of our countries can be. More young people will explore their horizons and develop to be the best they can be instead of being forced to work a full time low paying job and hit a dead end. Perhaps one day the new
economic life ought to be carried out by a country's government. These notions may not
We look in particular to the case of the United States. The US is the world’s leading power and hegemon, who also has the world’s highest GDP and GDP per capita. However, in recent years the gap between the rich and the poor has been growing at a fast pace. This prevalence of income inequality in a free market society like the US indicates that inequality is a direct result of a market or government failure. In a free market it is believed that individuals possess an equal opportunity to be successfully, but because of misallocation of resources in a market economy this is not possible.
Landes, D., 1999. The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor. New York: W. W. Norton & Company, 38-59
Standard of Living, in a purely material dimension is the average amount of GDP per person in a country (therefore determining access to goods and services). However the term has a much broader, non-material dimension involving issues of quality of life and are therefore much more difficult to quantify. There is no single measure of SoL, but a range of indicators, which can be used together to give a good idea of a countries’ SoL. Reasons for GDP figures alone giving an incomplete understanding of SoL in a country will be explained in this essay, along with problems faced when comparing levels of development between countries.
The use of taxes is one of the government's favorite ways to make its presence known in the economy. While this method seems blatantly obvious, many of the ways the government uses the money collected by taxation is not. Some of the money it takes is used to fund other programs designed to "protect" consumers and to "create" jobs. Be...
Today, more than ever, there is great debate over politics and which economic system works the best. How needs and wants should be allocated, and who should do the allocating, is one of the most highly debated topics in our current society. Be it communist dictators defending a command economy, free market conservatives defending a market economy, or European liberals defending socialism, everyone has an opinion. While all systems have flaws and merits, it must be decided which system is the best for all citizens. When looking at both the financial well being of all citizens, it is clear that market economies fall short on ensuring that the basic needs of all citizens are met. If one looks at liberty and individual freedom, it is evident that command economies tend to oppress their citizens. Therefore, socialism, which allows for basic needs to be met and personal freedoms to be upheld, is the best economic system for all of a country’s citizens.
...y supply and this causes the collapse in the U.S. and elsewhere (Pinnell, Lecture notes, 3/23). Consequently, countries become very protectionist to protect firms at home and international trade collapses (Pinnell, Lecture notes, 3/23). Therefore, states must make decisions with reciprocity and consequences in mind (Pinnell, Lecture notes, 3/23).
When looking through the topic of development, two drastically different ways to assess it arise. The majority of the western world looks at development in terms of per capita GNP. This means each country is evaluated on a level playing field, comparing the production of each country in economic value. Opposite this style of evaluation is that of the alternative view, which measures a country’s development on its ability to fulfill basic material and non-material needs. Cultural ties are strong in this case as most of the population does not produce for wealth but merely survival and tradition.
Economic development typically involves improvements in a variety of indicators such as literacy rates, life expectancy, and poverty rates. Due to the fact that GDP alone does not take into account other aspects such as leisure time, environmental quality, freedom, or social justice; alternative measures of economic well-being have been proposed. Essentially, a country’s economic development is related to its human development, which encompasses, among other things, health and education. These factors are, however, closely related to economic growth so that development and growth often go together.