We live in the information age. The global economy. Capitalism rules!
Over the past decade for example, import tariffs on cars has steadily dropped. I think its almost down to zero nowadays. As a result imported cars have become cheaper. The federal government introduced new law called 'Work Choices' basically instead of having an award wage, each employer can negotiate their salary, terms and conditions individually (now I'm light on details basically business and business owners also have more power to easily sack people etc.)
From an economic standpoint, the whole reason for bringing in such laws is to allow Australians to compete in say, manufacturing against up and coming economies like China, India, Brazil. Labour costs in Australia (and I would assume also in other western countries) is quite high compared to other less well off Asian countries. It is in-fact a strong contributor to the high standard of living Australians enjoy, because generally speaking, everyone is very well off.
I personally admire the U.S. free market system. It actually stems from the whole free world thing. You work hard, you will see just rewards for your efforts. As a result, high production output and then good consumption has lead to the U.S being the worlds largest economy.
The rise of China and India economically speaking is a very good thing. Economically speaking it means the global economy will be less driven by U.S. activity alone. The saying goes, 'if the U.S sneezes, the rest of the world gets a cold'. (No more global recessions, we can rely on India and China thanks.) There are 2 BILLION people in India and China, can you imagine how good it will be for the rest of us, if they start buying our products!!
Take China, a communist country. The first definition found on google for communism is as follows;
An economic theory which stresses that the control of the means of producing economic goods in a society should reside in the hands of those who invest their labor for production. In its ideal form, social classes cease to exist, there is no coercive governmental structures, and everyone lives in abundance without supervision from a ruling class. Karl Marx and Friedrich Engels popularized this theory in their 1848 Communist Manifesto.
One thing I find somewhat interesting is that if the whole world were a true free market system, we'd end up living like communists. Hey! whoa! hold on there!!
Let me explain. In economics, free economics especially, resources (ie: labour, capital, assets etc) move where there is demand. Simply speaking, its all about supply and demand. If the whole world were a true market system, where there were no international boundaries, no tariffs, no duties, no subsidies, no fixed exchange rates etc, everyone and I mean EVERYONE would end up making the same pay, everyone would be able to afford the same thing as the guy next door.
I also think as a result, goverments would cease to exist. There would be no requirement for such antique legacy systems. Democracy? nope, don't need it.
Free market system which would really be just another form of global communist society.
Labels: Economics, Random Thoughts
