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What is good about free market capitalism?
Free market capitalism is an economic system based on the private ownership of the means of production and the prices of goods and services determined by supply and demand. It is often contrasted with planned economies, in which the government controls the production and distribution of goods and services. There are many potential benefits to free market capitalism. Some of the most commonly cited benefits include:
Efficiency: Free markets are far more efficient than planned economies. This is because businesses in a free market are motivated to produce goods and services that are in demand and can do so at the lowest possible cost.
Innovation: Free markets are also seen as more innovative than planned economies. This is because businesses in a free market are constantly looking for new ways to improve their products and services, to stay ahead of the competition.
Choice: Free markets offer consumers a more comprehensive range of options than planned economies. This is because businesses in a free market can produce a wider variety of goods and services, and consumers can choose the products and services that best meet their needs.
Prosperity: Free markets have been credited with helping to create economic prosperity. This is because they encourage businesses to invest and grow, creating jobs and increasing living standards.
What do Some Think is Bad About Free Market Capitalism?
Of course, there can be potential drawbacks to free market capitalism; it is never perfect. The liberalism and progressivism represented by the US Constitution and the Rule of Law are the means to root out what is wrong. Some of the most commonly cited deficiencies include:
Inequality: Free markets can lead to imbalance, as some businesses and individuals become more successful than others. This is a natural phenomenon, always seen in healthy free-market capitalism. No person is entitled to the wealth of another; at the same time, all persons and their votes are equal in the eyes of the government. Inequities are an issue for cultural and religious ideologies, not government. The government can offer ways and means to motivate successful individuals and companies to lift the less successful to be self-supporting and live prosperous fulfilling lives.
Environmental Damage: Free markets can lead to ecological damage, as free market capitalism does not incentivize businesses to consider the environmental costs of their activities. The government's role is like the referee at an NFL football game. Penalize the company with an ecological cost tax, a carbon tax, and let free market capitalism sort out the solution, a job it is good at, as we have stated above.
Monopolies: Free markets can lead to monopolies as businesses become very large and powerful; a brilliantly successful company can not avoid becoming a monopoly in a healthy free market capitalist economy. Government should not make the problem worse by picking winners by putting its thumb on the scale, as this creates a government-caused monopoly. Individual politicians should not financially benefit from decisions made for the people. This can stifle competition and innovation, thus lowering prosperity for all. All government spending should be open and transparent, ending with the company with the best product, service, or solution selected by the government in the free market.
Ultimately, the benefits of free market capitalism are undeniable, and the drawbacks of free market capitalism depend on several factors, including the rules/laws/tax penalties imposed by the people through their government representatives. There is no doubt that free market capitalism is a very successful complex economic system; the full potential of free market capitalism has yet to be realized. Can the US do it?
Is there a better alternative to free market capitalism?
Whether there is a better alternative to the free market is a matter of opinion, but several economic systems that exist or have existed represent alternatives. Some of the most common options include:
Planned economy: In a planned economy, the government controls the means of production and the distribution of goods and services. This system was most famously implemented in the old Soviet Union but has also been used in the past by other countries like China. Today, the general understanding worldwide is a purely planned economy is nowhere as successful and productive as free market capitalism.
Mixed economy: A mixed economy is a system that combines elements of both free market capitalism and planned economies. The government plays a role in regulating the economy and allows for private ownership of businesses and property. Major countries in the world have mixed economies.
Socialism: Socialism is an economic system in which the means of production are owned and controlled by the people, either directly or through the government. (1) If controlled by the people, Socialism can be viewed as a pure democracy without the Constitutional guarantee of individual human rights, where the checks and balances of a constitution do not exist. (2) If controlled by the government, there is a high risk and probability that democracy, all the people, will lose control of a ruling minority. There are many different types of socialism, but they all aim to create a more egalitarian society, relating to or believing that all people are equal and deserve equal rights and opportunities. However, there is no doubt that socialism achieves a much less booming economy where the strong and politically connected ruling class has a much better life than most people.
Communism: Communism is a type of socialism in which the government owns and controls all aspects of the economy. There have been a few attempts to implement communism in the real world, but none have been successful.
Each of these traditional economic systems has its advantages and disadvantages. Free market capitalism is often praised for its efficiency and innovation, but some, mostly Democrats, think it is responsible for inequality and environmental degradation. Some claim that planned economies are more egalitarian but, at the same time, can be less efficient, innovative, and prosperous for all. Mixed economies try to strike a balance between the two, but they can be excessively challenging and expensive to manage. By far, the most efficient and prosperous economy for the benefit of most people is free market capitalism.
A country's best economic system will likely depend on several factors, including its history, culture, and resources. There is no single system that is perfect for everyone.
In addition to the economic systems listed above, several other alternatives have been proposed, such as:
Eco-capitalism: This system seeks to combine capitalism's benefits with environmentalism's environmental goals. In the USA, you can make this choice at your own risk. Above, in Environmental Damage, we discussed the proper free-market capitalist economy's response to objectively proven environmental damage.
Equity markets: This system would allow people to invest in companies based on their social and environmental impact rather than just their financial performance. Again, you are already free to make this choice in the USA. This is Socialism by choice. You are not investing in successful free-market capitalism; your investment is at risk! Both Russia and China learned the hard way that free-market capitalism is much more profitable and progressive than socialism. Look at history. The government's main job is to protect the human rights of all people equally. Any investment in the free market is personal; you are on your own.
Participatory economics: This system would give everyone a say in how the economy is run and would distribute wealth more evenly. This is pure Democratic Socialism. More or less, this may be the direction Russia and China may be trending towards. Russia comes from a failed, nearly 100% central planning Socialist past. China comes from an unsuccessful Communist past. World competition has progressed to where all-powerful nations utilize a mixed economy because power, prosperity, and progress depend on an economy with more than 50% free market capitalism. Sadly the current trend in the US is in the opposite direction. Our government is not progressing to improve free-market capitalism but instead moving toward an economy that leads to Democratic Socialism.
These are just a few of the many alternative economic systems that have been proposed. We will likely see even more new ideas as people continue to search for ways to create a more prosperous, just, and sustainable economy.
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Is China a planned economy or a mixed economy?
China is a mixed economy with planned(38%, trending down) ) and free-market capitalism( 62%, trending up) elements. The government plays a significant role in the economy and allows for private ownership of businesses and property.
China's economy is reasonably healthy, as its debt is only 49.5% of its annual economic output, GDP.
In the early years of the People's Republic of China, the economy was centrally planned. The government controlled the means of production and the distribution of goods and services. However, in the late 1970s, China began to introduce market reforms. These reforms allowed for more private ownership and market-based competition.
Today, the Chinese economy is a mix of planned and market elements. The government still plays a significant role in the economy, but it is not as dominant as it once was. The private sector is now an essential driver of economic growth.
Some of the key features of China's mixed economy include:
The government owns and controls many state-owned enterprises (SOEs).
The government sets economic goals and targets, using various tools to achieve these goals, such as taxation, subsidies, and regulations.
The government allows for private ownership of businesses and property but also imposes several restrictions on private companies.
The market plays a significant role in the allocation of resources, but the government still plays a role in setting prices and controlling the flow of goods and services.
According to the World Bank, the state-owned sector accounted for 38% of China's GDP in 2020. This means the government owns and controls a significant portion of the economy. However, the private sector is also increasing, accounting for about 62% of GDP and growing fast.
China's mixed economy has been immensely thriving in terms of economic growth. The Chinese economy has grown at an average rate of over 9% per year for the past 30 years. That means it is 13 to 14 times larger GDP today than it was 30 years ago and growing. This has lifted millions of people from poverty and made China one of the world's largest economies.
However, China's mixed economy has also been criticized for its lack of transparency and environmental impact. The government's control over the economy has made it difficult for businesses to operate freely, and its environmental policies have been criticized for being inadequate.
China's mixed economy is a complex system with strengths and weaknesses. The Chinese economy will likely continue to evolve in the coming years as the government seeks to balance the need for economic growth with the need for social and environmental sustainability.
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Is Russia a planned economy or a mixed economy?
Russia is a mixed economy, with elements of both planned(40%, trending down) and free market capitalism(60%, trending up). The government plays a significant role in the economy and allows for private ownership of businesses and property.
Russia's economy is very healthy, as its debt is only 20.1% of its annual economic output, GDP.
After the collapse of the Soviet Union in 1991, Russia underwent a period of rapid economic reform. The government privatized many state-owned enterprises and introduced market-based reforms. However, the government has retained a significant role in the economy, particularly in the energy sector.
Today, the Russian economy is a mix of planned and capital market elements. The government owns and controls many state-owned enterprises (SOEs). The government also sets economic goals and targets, using various tools to achieve these goals, such as taxation, subsidies, and regulations.
The private sector is also a significant player in the Russian economy. There are now millions of private businesses in Russia, and the private sector accounts for a substantial share of the economy. However, the private sector is still subject to several government restrictions.
The Russian government has been criticized for its heavy-handed regulation of the economy. However, the government has argued that this regulation is necessary to protect national security and ensure economic stability.
Russia's mixed economy is a complex system with strengths and weaknesses. The Russian economy will likely continue to evolve in the coming years as the government seeks to balance the need for economic growth with the need for social and environmental sustainability.
Here are some of the critical features of Russia's mixed economy:
The government owns and controls many state-owned enterprises (SOEs).
The government sets economic goals and targets, using various tools to achieve these goals, such as taxation, subsidies, and regulations.
The government allows for private ownership of businesses and property but also imposes several restrictions on private companies.
The market plays a significant role in the allocation of resources, but the government still plays a role in setting prices and controlling the flow of goods and services.
According to the World Bank, the state-owned sector accounted for 40% of Russia's GDP in 2022. This means the government owns and controls a significant portion of the economy, mainly in the internationally important fossil fuel sector. However, the private sector is also increasing, accounting for about 60% of GDP.
Russia's mixed economy has been both successful and unsuccessful. On the one hand, the economy has grown steadily in recent years. On the other hand, the economy is still vulnerable to corruption and economic shocks.
It is too early to say what the future holds for Russia's mixed economy. However, the government will continue to play a significant role in the economy for the foreseeable future.
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Is the USA a planned economy or a mixed economy?
The United States is a mixed economy. It combines planned(27.9%) and free-market capitalism(72.1%). The government plays a role in regulating the economy and allows for private ownership of businesses and property.
The United States economy is in trouble, as its debt is 129.2% of its annual economic output, GDP, compared to China's 45.9% and Russia's 20.1%. Levels not seen since WWII, the 1940s, when the world was on the edge of darkness. Are we there again? I hope not because in 1940, we had a huge advantage allowing us to quickly pay off our debt as the US was the only significant world power undamaged by the war. Today we are not in a place of advantage, just the opposite.
The US government has several tools that it can use to regulate the economy. These tools include:
The Federal Reserve:
The Federal Reserve (Fed) is the central bank of the United States. It regulates the economy by controlling the money supply and interest rates. Anytime the Federal Reserve has to use its tools, the government has a problem to solve, or some unforeseen black swan event has occurred. The use of federal reserve power should be viewed as a last resort. Its use is always unfair and disruptive to free-market capitalism, causing long-lasting ripple effects for years.
The Fed uses a variety of tools to achieve its goals, including:
Setting interest rates: The Fed's most important tool is the federal funds rate, the interest rate banks charge each other for overnight loans. The Fed can raise or lower the federal funds rate to influence the cost of borrowing for businesses and consumers.
Open market operations: The Fed also conducts open market operations, which buy and sell government bonds. When the Fed buys bonds, it injects money into the economy, which can help to lower interest rates and stimulate economic growth. When the Fed sells bonds, it removes money from the economy, which can help to raise interest rates and slow economic growth.
Changing reserve requirements: The Fed can also change reserve requirements, which are the amount of money banks must hold in reserve. When the Fed lowers reserve requirements, it frees up more money for banks to lend, which can help to stimulate economic growth. When the Fed raises reserve requirements, it takes money out of the economy, which can help to slow economic growth.
Lending to banks: The Fed can also lend money to banks in financial trouble. This is known as the lender of last resort function. The Fed's lending can help to prevent bank failures and financial panics.
The Fed's tools are used to achieve two main goals:
Maximum employment: The Fed wants to create an environment where everyone who wants a job can find one. However, it is tough for the government to develop a free-market capitalist career without being unfair and disruptive.
Price stability: The Fed wants to keep inflation low and stable. However, the most powerful manager of price stability is healthy free-market capitalism, refereed by hands-off solid government rules of law.
The Fed's tools are powerful but can also be challenging to use. If the Fed uses its tools too aggressively, it can cause the economy to overheat or recession. If the Fed is too cautious, inflation can get out of control. The Fed's job is to find the right balance between these two goals.
The Fed's regulation of the economy is a complex and delicate process. The Fed's tools can significantly impact the economy, so the Fed must use them sparingly and wisely.
Federal Reserve Checks and Balances: Every center of power in the US Government must be subject to checks and balances. How about a super-majority of Congress being able to modify decisions made by the Federal Reserve?
Taxation: The 16th Amendment to the United States Constitution was ratified in 1913 and grants Congress the power to collect income taxes on individuals and corporations.
The Congress shall have Power To lay and collect Taxes, Duties, Imposts, and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States, but all Duties, Imposts, and Excises shall be uniform throughout the United States; . . .
Before its adoption, the federal government collected most of its revenue from tariffs and excise taxes, and this was seen mainly as unfair.
Thus the government can use taxation to raise revenue. However, the meaning of "provide for the general welfare" has been used to borrow and spend an enormous amount of "free money" see below.
Free money is also used to influence the behavior of businesses and individuals. For example, the government can impose taxes on specific goods or services to discourage their consumption.
Government spending not backed by free-market productivity causes debt, damages the economy, causes inflation, and is most punishing to the middle class and people with low incomes.
Suggested Improvements, making changes to the federal government:
A sustainable local cost of living is set for each economically diverse area of the country, and no income taxes are collected up to this amount, reviewed annually.
Welfare is replaced by workfare for all people capable of work.
Individual income tax is a flat tax.
Individual long-term capital gain tax is a flat tax.
Business activity of all types is taxed on a graduated scale based on factors including the percentage of economy served, amount of profit, and extent to which it occupies a monopolistic position in the free market economy.
The US Congress is responsible for setting tax rates, the federal budget and paying down the national debt. Therefore, balancing the budget is a significant duty of Congress.
Subsidies: The government can also use subsidies, free money, to support specific industries or businesses. For example, the government may subsidize the production of renewable energy to encourage the development of this industry. This is an end-run on democracy and our Constitution that has existed since our beginning in 1776. Politicians are often influenced by parties known as lobbies to spend in return for reelection. This has been the norm for a long time, not a good look for the US. Today, even elected individuals enrich themselves while at the same time picking winners and losers in the free market. Even worse, they are elected representatives who enrich themselves while harming the US free-market capitalism by benefiting from foreign money.
Regulations: The government can also use rules to control the behavior of businesses and individuals in free-market capitalism. Freedom? Regulations are always at the cost of Freedom. These rules are not democratically derived; they are created and enforced by career bureaucratic government workers that often follow Socialistic political opinions. This is an end-run on democracy, our Constitution, and the checks and balances we depend on. When elected representatives in the executive branch of government implement regulations, it is an autocratic subsidy for individual profit. Ask yourself, could this regulation pass the Legislature as a law?
Free Money: Whenever government pays money to businesses or individuals in our free-market capitalistic economy for which no market value is surrendered, it is Free Money. As far as the free-market capitalist economy is concerned, all subsidies, regulations, and Government spending on public welfare is always free money. If you are a representative of the people, this is a compelling way to profit yourself and buy political votes; this is Democratic Socialism.
The Solution to The Free Money Problem: All regulations, subsidies, welfare, and other budget/free market-affecting matters must be approved by the US Congress, and decisions must be shared with the public. Any profit made by a representative of the People must be disclosed and associated with the record of the Congressional action. Elections have consequences.
Planned Economy
The US government owns and operates several businesses, including the postal service, Amtrak, and the Tennessee Valley Authority. These businesses are called state-owned enterprises (SOEs).
The US government plans and spends hugely to control public education in all 50 states despite control exerted at the state and local school board levels. Voters are going Republican concerning education and school choice. Democrats used to lead by double digits but now fall behind Republicans. The total reason for the parental democratic shift can be attributed to more than the unpopular DEI and CRT curriculum.
Political & Planned Versus Free-Market Capitalism Education
The US government put $189B into solving the education problem caused by the COVID pandemic learning loss, but scores improved little, and school crimes just got worse in K->12. Biden added another $1B in the same pockets to solve mental health issues. The answer is free-market capitalism, a bottom-up free choice from parents, the people, to choose effective, successful education for their children. The idea that the well-being of our children belongs to the government is wrong.
Catholic private schools in NYC, primarily for students of poor parents, pay $9,000, just 25% of what public schools cost at $36,000, while Catholic private school test scores are higher, and where nearly 100% of students graduate and go on to college. The story is the same across the US, where private schools spend less on average and get much better results, Return On Investment(ROI). Our children feel safer and are more satisfied in a private school and get a better education. The Red States are going to school choice rapidly, and the superior results, Return On Investment(ROI), will surely gain voter support in a free-market capitalistic democracy.
Democrats are committing political suicide. Even with the good intentions of Democrat NBA star Lebron James Family Foundation's private school, I Promise, the graduating 8th graders have not passed mandated math competency tests since their 3rd grade. Where is the Return On Investment(ROI)?
The private sector is also a significant player in the US economy. Millions of private businesses are in the US, and the private sector accounts for a substantial share of the economy. However, they are fighting an uphill battle dealing with Government regulations, inflation, free-market manipulation, and DEI fiduciary affecting politics.
The US economy is a complex system that has both strengths and weaknesses. The US economy will likely continue to evolve in the coming years as the government seeks to balance the need for economic growth, sustainability, and prosperity.
Here are some of the critical features of the US mixed economy:
The government owns and controls several state-owned enterprises (SOEs).
The government sets economic goals and targets but does not yet have a distinct central planning agency.
The government allows for private ownership of businesses and property and adds restrictions on private companies at an increasing rate.
The market plays a dominant role in the allocation of resources, but the government still plays a role in setting prices and controlling the flow of goods and services, which is antithetical to a free market.
According to the Heritage Foundation, a conservative think tank, the US economy is about 72.1% free market. This would mean that the government plays a relatively limited role in the economy and that businesses and individuals have a high degree of freedom to make economic decisions if it were not for the level of government interference we see in free-market capitalism today.
The US mixed economy has been thriving in terms of economic growth. The US economy has grown at an average rate of over 3% per year for the past century. This has made the US one of the world's wealthiest countries, with $146T, 31.5% of the world's wealth. China is second, with $104T, 22.7% of the world's wealth. China has increased by 9% recently. The US has increased by 3% recently. It is a horse race!
However, some have also criticized the US mixed economy for its inequality, environmental impact, and the gap between the rich and the poor, which has been growing in recent years, and the US is claimed to be one of the world's largest emitters of greenhouse gases.
The US mixed economy is a complex system with strengths and weaknesses. The US economy will likely continue to evolve in the coming years as the government, we, the people, seek to balance the need for economic growth and prosperity.
Politically Biased Conclusion Written By AI
The United States is a mixed economy, combining planned and free-market capitalism elements. The government plays a role in regulating the economy and allows for private ownership of businesses and property.
The US economy has faced challenges in recent years, including a high level of national debt. As of 2023, the US debt is 129.2% of the country's annual economic output, GDP. This is a significant concern as it surpasses levels not seen since World War II. The current global economic landscape hinders the government's ability to quickly pay off this debt, where the US is no longer the sole significant world power.
To regulate the economy, the US government utilizes various tools. One such tool is the Federal Reserve, which acts as the central bank and controls the money supply and interest rates. The Federal Reserve's actions can have far-reaching effects on the economy, and its use of tools should be considered a last resort due to the potential disruptions it can cause to free-market capitalism.
Taxation is another tool that the US government employs to regulate the economy. The government can collect income taxes on individuals and corporations, as the 16th Amendment to the United States Constitution grants. Taxes can be used to raise revenue and influence the behavior of businesses and individuals.
The government also employs subsidies to support specific industries or businesses. For example, the government may subsidize renewable energy production to encourage development. However, this practice has been criticized as an end-run on democracy and the Constitution, as it can lead to the government picking winners and losers in the free market.
Regulations are another tool the government uses to control the behavior of businesses and individuals. While regulations are intended to protect the public interest, they can also limit freedom and be undemocratically derived.
The US government owns and operates several businesses, known as state-owned enterprises (SOEs), including the postal service, Amtrak, and the Tennessee Valley Authority. However, the US does not have a central planning agency, and the government sets economic goals and targets without a comprehensive plan.
The US mixed economy has both strengths and weaknesses. On the one hand, the economy has experienced steady growth over the years, making the US one of the world's wealthiest countries. On the other hand, the economy has faced criticism for its inequality and environmental impact, as the US is one of the largest emitters of greenhouse gases.
In conclusion, the United States has a mixed economy that combines planned and free-market capitalism. The government plays a role in regulating the economy, but businesses and individuals have a high degree of freedom to make economic decisions. The US economy has grown consistently, but challenges such as high debt and environmental concerns must be addressed as the government seeks to balance economic growth and sustainability.
PopieTom's Conclusion
The US is in a precarious position. Its economy is dependent on its rivals and enemies. Even though it is hard to govern and referee, the ideal economy known to man is free-market capitalism. Even our rivals and enemies' socialistic central planning are devoting the majority of their economies to free-market capitalism out of necessity. Instead of taking on the hard job of improving, governing, and refereeing our free-market capitalistic economy, we are currently headed down a Democratic Socialist path into an indebted economy, weakening us to an inferior power in the World where the middle class and poor are reduced to serfdom. In our so-called free market, a ruling class will emerge from our elected representatives and their chosen corporate winners, oligarchs.
What To Expect With More Democratic Socialism
More Inflation
More Debt
No Brilliant Solution to Climate Change, Just More Expense
More Lawless Crime
Sociopolitical Power, The Ultimate Determinator of Truth
Illiberal, Non-Progressive Government Stagnation
More Disadvantaged People, Serfdom
What To Expect With More Free-Market Capitalism
Elimination of Inflation
Elimination of Debt
Brilliant Solutions to Challenges Like Climate Change and Others
Support for The Rule of Law
Free Speech and Liberal Debate, The Ultimate Determinator of Truth
Liberal, Progressive Government
Self-Supported, Productive Prosperous People, Happiness!!!
There is a chance we can reverse this trend and become the first constitutional republic to master the management of a pure, 100% free-market capitalistic economy where every citizen is free and equal to pursue a successful and happy life.
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