Central planning or the byproduct of socialism as many have known for
some time is a failed idea that which has been confirmed by the fall of
the Berlin wall and breakup of communist Russia. So what's the next
best option? Open market capitalism. Better, of course, but certainly
not perfect. So why is it our economic savior? Let's examine the issue
in some detail historically to begin.
When the Berlin Wall came down in 1989, central planning was
exposed for the obvious failure it was and is. Along with the fall of
communist Russia around the same time, thanks to the somewhat hands off
approach of Mikhail Gorbachev (ie: not sending troops in E. Germany or
Poland as they moved toward democracy), communism and central planning
or frozen markets were mostly history. Even China as early as 1978,
South Korea, Hong Kong, Singapore, Taiwan, India and others stepped
into the open waters of the free markets.
Because so much of the world has begun to interact on a large,
free open scale this has changed the economic picture considerably. It
has not only shifted a significant share of the world's gross domestic
product (GDP) to the developing world but has caused a rift of
fundamental economic uncertainty as this new world economic order plays
out. Economists are still dealing with what is called market "noise" or
change that may or may not be of significance (for more on this read
When World Markets Collide by Mohamed El Erian).
But what are the specifics of this majority shift to competitive
markets? For the obvious, it has created greater savings (undeveloped
countries don't have the capitol to do so), health, and wealth. But it
has also helped to suppress interest rates and rates of inflation for
all developing countries. And according to the
Economist,
"having grown at an annual rate of 3.2% per head since 2000, the world
economy is over halfway towards notching up its best decade ever"
(2006).
Bottom line, people want to enjoy life. Open or competitive
markets optimize opportunities for people to do things they not only
want but need: mobility, interaction, enhancement of self-esteem and
self-worth, and general enjoyment of life. The world wide open markets
have created an entrepreneurial gold rush where more and more people
are creating businesses not only to make money but to express and find
themselves. In America, for instance, 1 out of 6 own a business in some
form. Through these opportunities people are going beyond just
fulfilling the basic needs of sustenance, shelter, and comfort, but
they are working toward what Maslow called human actualization. Through
open markets people are fulfilling their psychological needs,
self-actualizing even obtaining peek experiences.
Certainly there is the problem of the few having the wealth,
like in India which ranked 12 th in GDP yet almost 50% of its people
live in poverty, but that is a matter of the few being in political
control, an issue that certainly has to be addressed by a worldwide
community if this free market experiment is to prosper. However, all in
all free market enterprise with proper regulation and management can
and will be the super hero it is made out to be.
May this do-gooder make us all rich in mind, body, spirit, and
soul and less dependent on the state, family, friends and poor paying
jobs to provide the basics and to employ the excess in coming to the
aid of our fellow man ala Bill Gates.
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