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How do you forsee the economy developing in the near future? |
Travel Info How do you forsee the economy developing in the near future? Travel Tips good answer dwali Others Wow thats a big question to ask on such a cold day ... Well I have heard that the banks are going to start lending less, because so many of us have overextended ourselves financially ... thats going to hit a lot of the "middle class" who live on credit. Petrol price increases regularly which effects the price of all consumer products, except the price of chips at picknpay which seem to always come down?! I would love to say everything will be great but we as a nation have holes in our pockets and spend every cent we can get our hands on. Only advice would be - start saving Slowly, shortange in skills, overemphasis on commodities, shortage of cement and related products (BUT still faster than it ever developed under APARTHEID). NO that is something to chew on. The government will probably still try to implement it's Socialist model of economy but it won't work as it hasn't in the past. After years of failing with this model it will revert to a free market economy. Note not Capitalism but a true free market economy. A free market economy is the most effective and efficient type of market there can be. For there to be a true free market economy the following would need to be in place: The market must be truly free so that new entrants can come into the market and sell at whatever price they like. Price fixing by cartles of firms must be banned as well as monopolies by one or more companies. If there is a natural monopoly then it should be regulated impartially by government or even provide the service itself like police services or schooling. Competition between companies should be encouraged and less market co-operation (which could lead to price fixing) - competition which spurs on innovation, cost-saving and customer care. Buyers and sellers must have the same information about what is being sold. If the buyer is ill informed through no fault of his own or due to deliberate misinformation, then he/ she needs consumer protection. Finally, and most crucial, the effect of the voluntary exchange between buyer and seller must be limited to those parties only. If the deal affects others adversely there is then a net loss to the economy as a whole. The classic example is the factory. A mill owner sells cloth or steel to a willing buyer. In the process of production his factory deposits smoke into the air which is also breathed by others. In economics this is termed an external effect or externality. An efficient free market economy will reduce the effects of this externality by taxing the factory owner for the cost he imposes on his neighbours by taxing him for the smoke he creates. He then internalises these costs and treats them as his own. A cruder alternative would be to regulate his smoke emissions. As the need driving it increases we'll see more of this type of economy in the future. |
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