Deregulation, Privatization And Trade Liberalization

The free marketplace represents a superlative model of capitalism, since it denotes the most proficient and profitable way of production. In a free market, economic actors are capable of conducting business devoid of political interferences, such as the burden of a minimum wage, or trade in tariffs. Without these limits, economic actors are abridged to a state of clean competition, driving costs downstairs and resulting in senior quality and lower price products.

As Milton Friedman once said, “Freedom is a rare and delicate plant. Our minds tell us and history confirms that the great threat to freedom is the concentration of power. Government is necessary to preserve our freedom, it is an instrument through which we can exercise our freedom; yet by concentrating power and political hands, it is also a threat to freedom.” Friedman’s “Capitalism and Freedom” takes us into the mind of an economic genius and shows us his beliefs in a free market and the threat it presents to a dictatorship. Friedman, clearly a supporter of the free market, gives examples to show how a free market can aid a society in striving for success, becoming more dominant, and becoming more powerful. Though, at times he does show how a free market has disadvantages and he makes us aware as to how it can aid people in gaining individualism, knowledge, and overall improving a society. A free market is one that the price of a good or service is determined by supply and demand, in theory, rather than by government regulation. Milton’s thoughts and theory is that through a robust free market with political freedom, economic freedom will follow. Showing how economic freedom is a crucial toward the success of political freedom, Friedman’s theory of a free market and the Do Nothing Principle are major themes throughout his book.

with the public sector. Privatization refers to shifts in ownership from government to private for-profit

A free market is a type of market that the government is not involved in. Since the government does not care about what happens, the free market is also called “hands-off” or “let it be economics”. The government is limited to protect the citizens from the danger and that is the major goal for the government. In the free market economy, there are three components of the free market economy: competition, active but limited government, and the self-interest. Competition is one of the main components of the free market economy. Competition means that the companies compete with one another to make more benefits to themselves. According to the concept of the free market economy, the competition means a good thing because it is a basic

However, what many fail to realize is that some form of government regulation within a free-market economy, such as in America, is vital to its flourishment. Personally, I am in support of a free-market economy, but to an extent. The article, Faith in an Unregulated Free Market? Don’t Fall for it, stresses the importance of the presence of moderate government regulation. Without any form of regulation, “an unregulated competitive economy will inevitably spawn an immense amount of manipulation and deception” (Shiller NYT). The example is given that it is like when grocery stores put candy bars at the checkout counter; they know whining children will often force parents to make the additional purchase, providing the store with a way to draw in additional revenue. Amazingly, checkout-line items alone can draw in up to 17% additional profit for a business. With this in mind, it is the aims of the author to make his audience aware that without any regulation, “harmless” manipulation such as this may be exacerbated to a greater level. This could result in privately owned businesses charging their customers higher prices that people will have to pay because there are no governmental laws preventing them from doing so. I too believe that some form of regulation is necessary to prevent externalities like these from occurring in a free-economy. Without rules, the people within the economy

The reasoning behind this element is, for one thing, that leaving the allocation of resources to the market typically ends up being more efficient - it is beyond the scope of this paper to explain why. A second reason to value the autonomy of market forces is that it leaves more freedom and choice to both the consumer and the producer. If a centralized government provides a good or service, there may only be one type of service, and consumers cannot choose. On the other hand, under a free market, different firms have the freedom to compete, providing the good or service as they see best. This results in a diversification of the available product, and consumers can choose which type they like best. As a result, and this is the third reason for decentralizing the economy, both consumers and producers will have an incentive to work harder. Producers, because working harder will (hopefully) make them have a better product, which they can then sell for more money; and consumers, because working harder will (hopefully) bring them more money, so they can afford a better product.

Free markets have often been idealized in the US, and have become a dominant tool for trade and distribution of goods and services. There have been multiple waves of government regulation and deregulation of the market in US history. Each of these trends have been grappling with the central question of how sufficient markets are at satisfying our goals. In theory, free markets are fair and efficient at distributing goods and services. In reality, however, government must intervene in the marketplace for two overarching reasons. First, because in practice free markets left to themselves are not always fair and efficient. And second, because fairness and efficiency are not our only goals and

Understanding that heavy economic repression was unsustainable and leading to the worsening economic conditions, the liberalization reform plan aimed to decentralize markets and relax some restrictions set by the previous government. The first policy deregulated the commodity market by reversing price freezes, privatizing previously nationalized

In a market economy, the private-sector business and consumers decide what they will produce and purchase, with little government intervention (Article #1). In chapter 18, section 1, the author says,” Under capitalism, the means of production are privately owned. Supply and demand determine prices, and businesses are free to direct resources into activities that promise the greatest profits”(Page 492). the author is explaining that capitalism productive resources into activities are privately owned and operated. There are several advantages of capitalism, but the main advantage is efficiency. Some examples of the advantages of capitalism are freedom, capitalism is highly decentralized, high degree of consumer satisfaction, and flexibility to accommodate change. Although not all governments are perfect, capitalism has its advantages, which include that capitalism ignores the production of many public goods such as roads, public schools, a system of justice, and

"23 Things They Do Not Tell You About Capitalism" by Ha Joon Change demonstrates the hidden stories behind the free-market ideology. We were told that if the government intervenes the market, firms would not work efficiently. Hence, the only way to maximize efficiency is to let individuals who know best about how to utilize their own resource to act rationally. This is the belief of free market, which we have trusted and have been told. However, in the real world, there is no such thing as pure laissez faire policies as we have believed. Every market has its own rules, regulations and restrictions, covering freedom of choices. The only reason is politics because there is always such situation where government need to step in and intervene.

Privatization is the act of transferring ownership of a specified property or business operations from a government organization to the hands of a privately owned entity. This as well includes the transition of ownership from a public company to a private company. During the 21st century, the economy of United States have changed due to the industries that have been selected to be privatized by the government such as transportation, education and health care. Private sectors in the United States have taken control of these industries which is formally controlled by the government. It is noticeable that, the presence of privatization in the United States during the 21st century has affected the United States citizen negatively. The transportation

Another advantage with the removal of government interference from the economy is a reduction in the start up costs of new corporations along with a reduction in taxation, since less requirements and regulations are now in place. With business no longer having to conform and abide by strict regulations, this allows more innovators to enter and profit in the marketplace with their ideas. These inventors will create jobs for their new business and products even reducing unemployment. Free market economies offer the highest incentive to be the next Bill Gates or Steve Jobs since one is able to succeed and profit solely based off their own product or idea, making this the most efficient economy possible. With more entrepreneurs able to enter the market, there will also be a rise in competition, or business competing for customers to buy similar

Problems facing regulatory government supports deregulation. First, the cost in regulatory jurisdictions is quite high. Regulated markets tend to offer fewer benefits to society than free markets. Also, private sectors are self-regulating by employing independent external auditors whereas it is a general observation that lawsuits are an incentive to provision quality services by firms. Regulation reforms enshrined in the constitution monitor the legislation, executive and judicial structure of the regulatory agencies as the government seeks to create and maintain a better working environment in the society. Traditional managerial approach to governing administration is characterized by red-tape and bureaucratic one sided decision making whereas the new public management approach focuses mainly on bilateral decision-making and is compliance-oriented. Political strategies have transformed from a self-centered, corrupt inclusion in the agencies to a more open centered approach that focuses on its citizens’ welfare, just as the legalistic approach focuses on maintaining reasonability in the regulation process with keen observation of the rule of

All of the market is voluntary, no coercion. Milton Friedman explains, “Political freedom means the absence of coercion of a man by his fellow man.” There would be people trading with other people only when they themselves benefit from the situation. This way people have the choice on how much to trade, or to even trade at all. Everyone can benefit from a competitive market. Friedman explains, “By removing the organization of economic activity from the control of political authority, the market eliminates this source of coercive power. It enables economic strength to be a check to political power rather than a reinforcement.” Without this sense of being forced into situations, people are a lot happier. When people are voluntarily participating in the free market, then the government makes money consequently. The competitive free market takes some responsibilities from the government, so the government can run better. A more competitive free market allows for the government to function more smoothly.

Regulations imposed by the government in any economy determine the market efficiency and growth. Policies and laws governing the flow of goods and out flow determined the internal trade affairs. When the government formulates policies and regulations, which is the market conducive, efficiency is enhanced. In such instances, the outcomes of the market yields can be predicted. Such ability of the policies and regulations to enhance efficiency in the markets can be enabling the government to have prior arrangements and plans concerning future economic goals. On the other hand, as the governing body there is a need to establish the effectiveness of the current policies in enhancing marketing efficiency. However, there is a need to establish the criteria for determining the correctness and effectiveness of the regulations which are to be set. Governing body should intervene in the control of the market regulations though independent bodies and private sectors should be involved in such regulations formulations. Many economies, such the United states and United Kingdom, the government has the power to intervene in the market policies. When the market fails in such instances, the government is blamed for the failure. The modern economies advocates for more freedom of choice in the formulation of regulations of the markets. Others concentrate on the efficiency of the policies and regulations in the achievement of the market goals.