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Proponents of free market systems argue that free enterprise leads to more efficient production and better response to changing consumer preferences. Others point to the fact that markets are not perfect. Consider both viewpoints and respond to both sides of the issue with your viewpoints.
The 20th century contains many examples of the inefficiencies of purely a 'command-based' economy. Command or planned economies keep employment artificially high and the prices of goods artificially low. There is little incentive to create new enterprises to meet consumer demands, and little incentive for workers to be productive. Scarcity seems hard-wired into the system and corruption and bribery is rampant as consumers resort to the black market to get the goods that they desire.
In a free market system, the 'invisible hand' of the market determines what goods and how many goods are produced. "Adam Smith assumed that consumers choose for the lowest price, and that entrepreneurs choose for the highest rate of profit. He asserted that by thus making their excess or insufficient demand...
Additionally, in a competitive market, producers must also provide a higher-quality product than exists in a controlled market economy. In contrast, in a command economy, there is only one, state-owned producer, and there are no quality controls upon the producer other than the state. The leadership of command economies is often highly prone to corruption, which may further interfere with the ability of a planned economy to respond to consumer needs.
However, free markets are not always 'free.' There may be profound asymmetries of information between the consumer and the producer. Companies may misrepresent their products, spanning from cereals with dubious nutritional content to cigarettes. A good example of this was during the recent housing crisis, where people took out adjustable rate mortgages they did not understand that were prohibitively expensive. They also did not understand the self-interested motivation of the bank in extending…
References
Joyce, Helen. (2011). Adam Smith and the invisible hand. Plus. 14. Retrieved July 16, 2011 at http://plus.maths.org/content/os/issue14/features/smith/index
With expensing, the first tax is abolished. Saving is, in effect, deducted in computing the tax." The following list summarizes the key aspects of the flat tax (Rabushka, 1997): 1. "The flat tax, in effect, removes the tax code from the economy. No individual, household, or firm needs to take into account any tax complications that arise from their economic decisions and activities. The tax system is designed for the sole
Higher Education Should Be Free Should higher education in the United States be free? An examination of available evidence suggests that it should be. I hope to go through a number of the most persuasive argumens as to why higher education in the United States should be regarded as a public good (like clean air or working highways) rather than as a market commodity (like iPhones or Furbies). The United
Having a free market economy is one of the things that makes growth possible, although there is also inherent risk in it. More than one company can offer services, and the competition of more than one or two companies will help to keep services competitive and prices low. Competition, however, can also have its problems. Because of the way that some products are packaged and structured, and the multiple
The case of the World Commission on Dams is a good example of how this tendency to centralize water resource management can be mitigated, if not completely eliminated. The political reality of the world is that government represents more than just laws and policies, just as management and governance has to be about more than just enacting laws and edicts, but should reflect the values of the community and the
Politics Although it is not perfect, the presidential system of government, as typified by the United States (U.S.) is the best system of government ever conceived. By creating a system where the public can remove administrations, without changing the legal basis for government, democracy aims at reducing political uncertainty and instability, and assuring citizens that however much they may disagree with present policies, they will be given a regular chance
Political Science Politics can very well be defined as the study of who gets what, when and how? The principal reason for such a definition is that politics conflicts between the demands for certain satisfaction and this conflict contributes to the major characteristic of every society. No society can meet all the people's wants, needs and desires. Resources cannot be distributed in accordance with the relatives bargaining power of its members.