Free Economy

[sim_min]

I have been trying to understand what free economy means. What about free trade or free market? are they the same? does it related to the tax of imported cars that malaysia is supposed to have agreed, which has been discussing??...i don't really know about this topic...can anybody help?

[__earth]

I myself do not know what free economy means. But if you meant economic freedom, then that is just freedom to conduct any thing. Basically, its just freedom from the economic POV.

Free trade means ability to trade without restriction. Free trade is the reason why trade barriers are going down in the recent past.

Free market is a market, in layman term the economy itself, where everything from labor to capital are able to move around without restriction imposed through taxes, subsidy, etc. In other words, everything, price for instance, are determined purely by supply and demand, no other artificial rule like price floor or ceiling or whatever. In contrast, a planned economy, like communism for instance, is a total opposite of free market.

Concerning tax on imported cars, that's a trade barrier. With respect to this, you could say that the Malaysian trade is not really liberalized.

[el_empty]

i think there is no country that actually practises a free economy. most have some sort of government influence, be it a direct or indirect one - in other words i believe a free economy refers to an economy (this includes markets, trade, industries blablbla) that has no or little intervention from the govt. this free economy has its roots in adam smith's 'invisible hand' where economies regulate themselves, and stand to be distorted if artificially malleated by the government or some sort of executive authority.

[jiinjoo]

I thought Adam Smith himself said something about the government having to facilitate the free markets, or else it won't happen.

Put it simply, we're always taxed. Or else there's no government coz they will go bankrupt. Without protection of the government we'll not trade but keep the resources to ourselves - people will steal and plunder etc. That's anarchy. So, we'll always be taxed.

But still, we want to champion "free markets" or free economy, whatever, i.e. lower the barrier to trade. I think that it's more of an ideology rather than a fixed rule like "we need a 95% confidence interval that taxes == 0 before we consider this a free market". That won't work.

To have the economy regulate themselves, we need the MATRIX.

[el_empty]

i believe it was keynes who propelled the idea of the role of the government in fine-tuning the economy. smith was about the removal of the govt in this system.

as we all have learnt in economics, none of the extreme measures work. the best and only solution is the moderate one, a little bit of both, and lots of push and pull.

cheers

[ygod84]

i think US is a free ecominic contry right? :arrow: not sure...

[yangster]

i believe it was keynes who propelled the idea of the role of the government in fine-tuning the economy. smith was about the removal of the govt in this system.

as we all have learnt in economics, none of the extreme measures work. the best and only solution is the moderate one, a little bit of both, and lots of push and pull.

cheers
agree.
Don't let dichotomy logical thinking fool us
there is no total free market is correct, government intervention is wrong or vice versa. hmmm.. i think that's why human exist..
government intervention/planning + free trade = the optimum solution/economic equilibrium