To what extent do you agree with free market economies being more Essay

To what extent do you agree with free market economies being more effective than a mixed economy - Essay Example The following are some of the mixed economies where with illustrations indicating statistics of government spending in relation to GDP: Sweden 57%, France 52.8%, Iceland 57%, USA 38 %, China 20%, UK 47.3, and Hongkong 18.6%. There are other countries as well. Such economies are government managed while the rest are individual or private firms managed. As the economies grow, the government usually takes higher portion of the total spending. In developed countries, e.g. Western Europe opts to offer state welfare support. The government greatly regulates business environment and environment. Benefits of Mixed Market Economies Most businesses and industries are usually governed privately. Normally, private firms are more effective than government ones since they are usually innovative in nature and provide cheaper services and products. In a mixed economy, the government does not have the total control over the market i.e. such as in market regulation et cetera. It has been argued (Urai 2010) mixed economy may in given cases allow government to regulate the market during instances of market failure. This may include: Regulation of monopoly where they abuse their status e.g. controlling hiked prices, prevent mergers, subsidizing goods and services commonly under consumed in free market. This may include healthcare, national defense, public goods. Regulation and taxation of goods with negative implications e.g. Government can implement policies to provide macroeconomic stability e.g applying monetary policy measures during of inflation. Economic reports have shown that mixed economies are likely to create equality at a greater level while reducing extreme poverty. It may simultaneously enable people to enjoy financial rewards from their entrepreneurship and hard work (Beckwith 2011). Disadvantages of Mixed Market Economies It may be difficult to determine to what extent the government will intervene. Mixed economies usually face criticism from socialists and economis ts owing to the fact it allows excessive market forces amounting to inefficient and inequitable distribution of resources. It is criticised by free marketing since it allows too much government intervention. According to libertarians, governments are generally poor managers of economy normally influenced by short term and political factors. According to Chow 2012, the reality is, success of mixed market economies depends on how they are managed. Economists argue that every market needs some extent of government intervention. In the book, ‘Wealth of Nations’, Adam Smith argues that in wealthy countries, government should come in between to control the monopoly power. Free Markets There are various benefits that are usually associated with free markets. This has created a school of thought that basically supports the corpus of free markets economies. One of the benefits that are associated with free markets is the fact that they are competitive in nature. Their industries are commonly perfectly competitive, allocative and efficient at production. Free economies efficiently allocate their resources. Additionally, there is also variety of choices associated with free markets. Firms produce what consumers are willing and ready to buy. As it is a free market, there is no restriction as to what a firm can produce. Therefore there is usually a possibility of having a large choice compared to the mixed market. The interest of the planner is to ensure