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Capitalism Essay

1348 words - 6 pages

"Underlying most arguments against free market is the lack of belief in freedom itself." [Milton Friedman] When deciding to what extent should the government intervene in the economy, the following questions must be answered: Does the economy experience periods of boom and bust? Are the goods of high quality? Is there equality, or disparity? Answering these questions spawned many philosophies; the most prominent being capitalism and socialism. Capitalism is an economic system in which the nations economic decisions are the result of individual decisions by buyers and sellers. The economy is flexible, technological advancements are welcomed and occur readily, and consumer get the best quality ...view middle of the document...

Upon analysis, the issue remains complex; however, a welfare capitalist economy appears to be the best way for the government to intervene in the economy, because the government is permitted to regulate the economy somewhat, yet you still get the benefits offered from classic capitalism.In a welfare state, where moderate socialism is promoted, citizens can irrationally take advantage of social programs. In 1998 in Sweden, the government raised compensation levels for sick leave from 75% to 80%, and the number of people receiving compensation went from 170 000 in 1997, to 340 000. A survey was conducted, and 60% of people surveyed believe that it is acceptable to call in sick for reasons other than sickness. After taxes, the maximum benefit for people on sick leave is 1500$ a month, similar to the pay most workers get for working four 40 hours weeks. The estimated cost of the lost man-hours amounts to $16 billion a year. The budget for the benefits surpasses the states military and education budgets combined. This costly waste of production hours that strains the states budget is a result of relaxed socialist policies, and a poor work ethic caused by the ease of getting sick benefits.Lack of incentive to produce quality goods in a socialist economy can be disastrous for consumers of products from a state-run industry. In 1990, the military industrial complex in the Soviet Union employed roughly 20,000,000 workers, and commanded nearly 40% of the Union's machine-building factory capacity. The military industry was perceived as strong because it received priority for obtaining scientific, technological and material resources. The industry was paid mainly for it's gross output, and could produce goods with no concern for quality. In 1989, a nuclear submarine sunk when electrical fires broke out, as a result of poor workmanship, causing approximately 40 deaths. Within the next two years, four other submarines suffered the same fate, and electrical fires were recorded on 16 separate occasions on other submarines in the fleet. The Ministry of Shipbuilding was fined more than 3,000,000 rubles for delivering substandard equipment for submarines, but the socialist wage system in place kept the workers who were at fault from paying anything. The lack of incentive to produce quality goods in a socialist economy needlessly caused the death of 41 people.Too little government control can lead to companies trying to eliminate consumer choice, leading to a monopoly. Since the US has finally opened a string of court cases against Microsoft, their misdemeanors have been revealed. The have shut down and ran 116 companies and counting out of business so far, and for this, they have been fined 8 million dollars; merely pocket change to a multi-billion dollar corporation such a Microsoft. They forced computer manufacturers to use their Windows 95 as the only operating system. Manufacturers are not even allowed to distribute, promote, or buy non-Microsoft goods....

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