Continuum of Economic Systems

Labeling and characterizing particular countries economic systems based on how they are organized to allocate societies scarce resources can be a tricky proposition.  People tend to insert their own biases in assessing the label.

Here is a simple presentation of the "facts".  We can debate/argue the specifics of where a particular country falls on the continuum (I inserted select countries on where I think they fall), but the over-arching considerations should be what I outlined in the textbook:

1.  The level of government ownership/control of societal resources.

2.  The level of regulation and taxation over economic activity within the country.

These are broad, for certain, but I believe serve as a jumping off point for discussion.

For instance, take the US.

The Private Sector holds a vast majority of overall societal resources, but not all.  National Parks are one significant "land" resource that I can think of that the Federal Government owns outright.  Is this "socialism" in the context of all societal resources combined?  I think not so that is why I put it closer to Free Market than Socialism. Does the US regulate/tax economic activity?  Yes, to some degree so we cannot give it the full label "Free Market". With this one you have to consider "relative to what/who?"

In this case I choose the UK. In the UK the healthcare system is owned/operated by the government and they have a higher level of taxation compared to the US (this is a generalized statement on my part).

After understanding where you fall on this line, the debate becomes which way is "best" for your country to move---towards Free Markets to the left or Socialism/Communism to the right.  This is political tension that is derived from the economics.

1 Billion fewer people living in Extreme Poverty in the world just since 2000. Who (or what) is responsible for this miracle? Nice graphic here.

Here is a graph from The Economist showing the dramatic decline in the number of people in the world living on $1.25 per day (or less).  This is the formal UN definition of "Extreme Poverty". 

Focus on the span between 2000 and 2013 (guesstimate). The slope gets steep--approx 1 Billion people have climb above the $1.25 mark in 13 years.  Keep in mind, since 2000 the world population has GROWN by about 800 million as well. 

While this is good news, the drop was not evenly distributed.  China alone is responsible for about 75% of the decrease.  Of course, this is mostly due to the rapid industrialization and globalization China set in motion with more market orientated (very loose and generous definition) policies in the 80's and 90's.




Source: The Economist

Who would you rather see after a natural disaster---A FEMA official or a Walmart Associate?

  

I have seen many stories on TV this morning about communities preparing for potential disaster on the East coast.  Much of the focus is on how local, State and Federal governments are responding, as it should be at this point.

The story below from NPR is a reminder of how businesses (Walmart, Home Depot) are also busy preparing for post-hurricane scenarios to ensure that basic needs are met and there are minimal shortages of staple goods. Good logistics (HT: Mikeroeconomics) and coordination between the public and private sectors will hopefully create an outcome that limits human suffering and property damage. (HT: Carpe Diem)

Big-Box Stores' Hurricane Prep Starts Early

""Forecasters don't expect Hurricane Irene to make landfall until Saturday. But for nearly a week now, big-box retailers like Walmart and Home Depot have been getting ready.

They've deployed hundreds of trucks carrying everything from plywood to Pop-Tarts to stores in the storm's path. It's all possible because these retailers have turned hurricane preparation into a science — one that government emergency agencies have begun to embrace.""

The Walmart-ization of America...Video of Walmarts US growth in 26 seconds...

The Walmart-ization of America...Walmarts US growth in 26 seconds...HT: Carpe Diem

Short video explaining the link between Economic Freedom and Standard of Living. So simple, yet difficult to achieve...

HT: Division of Labour