Explain in detail what you think are the key strengths and weaknesses of each of the three versions of free-market philosophy that we have discussed in class. Which version do you think makes the most sense? In your defense of your chosen philosophy make sure to include an assessment of how well it deals with the current problems of unequal wealth distribution.
Here is an interesting summary of Ron Paul’s views on the economy. He’s definitely a free-market philosopher; but sometimes I think he sounds more like a referee-style philosopher than a night-watchman philosopher. See what you think.
1) Find a real-world example–not a hypothetical or imaginary example–of an externality involving damage to one person’s property or well-being caused by the actions of another. (The coal-mining case we discussed in class is one example of this.) Be sure that in your example the actions of the responsible party–the one causing the damage–*do not* involve force, theft, or fraud. Also be sure to explain exactly why your example constitutes an externality, as we have defined it in class. Finally, be sure to explain the example in enough detail so that someone who was not in the class can easily evaluate your claim about why it is an externality. (NOTE: make sure your example does not fit the “tragedy of the commons” format. Please do not use examples we have discussed in class.)
2) Find a real-world example–not a hypothetical or imaginary example–of an externality involving a tragedy of the commons. (The North Sea case we discussed in class is one example of this.) Be sure the actions of the responsible parties *do not* involve force, theft, or fraud. Also be sure to explain exactly why your example constitutes an externality, as we have defined it in class. Finally, explain the example in enough detail so that someone who was not in the class can easily evaluate your claim about why it is an externality. (NOTE: Please do not use examples we have discussed in class.)
**As always, your explanations are written so that someone who was not in the class would understand it. Your assignment should be 1-2 pages long, and computer-printed in 12-point font, with no more than one-inch margins all around. **Please include your name, the due date (3/10), and your section # (13190) at the top of your paper!** A hard copy of your assignment is due in class on 3/10.
*Here are some resources:-
“Resources on the Free Market & The Distribution of Wealth” has a lot of discussion (mostly pro-free-market) regarding how free markets handle disparities in wealth. This will help you with essay question #1, and also to some extent with essay question #2. (See especially von Mises’ essay, which, with the exception of the first two or three paragraphs, is entirely a critique of philosophies like liberalism that allow the government to intrude extensively into the free market.)
some outside sources on the distribution of wealth & the free market
?note: none of these materials are required reading. Nor are you required to use any outside sources on your exam, although you are certainly permitted to do so. Nonetheless, you may find some of these articles useful as you try to think through the second part of the first exam question!
Wikipedia articles on the distribution of wealth
Wealth inequality in the u.s.
Distribution of wealth
Affluence in the U.S.
Wealth in the U.S.
Articles discussing the relation between the free market and inequalities in wealth
?Robert Shiller Argues That Rising Inequality In The US Was A Major Cause Of The Recent [Economic] Crisis, And Little Is Being Done To Address It,?
?Human Development and Wealth Distribution?
By Dominique Strauss-Kahn, [former] Managing Director, International Monetary Fund http://www.imf.org/external/np/speeches/2010/110110.htm
?Equality and Capitalism: Capitalism Continually Makes People Better Off,? by Donald J. Boudreaux http://www.thefreemanonline.org/columns/equality-and-capitalism/
?Poverty and Inequality in the Global Economy,? by Michael D. Yates http://monthlyreview.org/2004/02/01/poverty-and-inequality-in-the-global-economy
?The Private Provision of Public Goods,? by Donald J. Boudreaux http://www.thefreemanonline.org/columns/thoughts-on-freedom/the-private-provision-of-public-goods/
?Inequality of Wealth and Incomes,? by Ludwig von Mises http://www.thefreemanonline.org/columns/inequality-of-wealth-and-incomes-3/
?Review of Robert Frank, Falling Behind: How Rising Inequality Harms the Middle Class,?by Alan Reynolds http://www.thefreemanonline.org/book-reviews/falling-behind-how-rising-inequality-harms-the-middle-class/
?Inequality Matters: Massive Disparities in Wealth and Income Really Do Distort the Democratic Process,? by Sheldon Richman http://www.thefreemanonline.org/columns/perspective/perspective-inequality-matters/
?Wealth and Income Inequality in the US,? by?Pater Tenebrarum http://www.acting-man.com/?p=8422
Ron Paul?s position on the economy http://www.ronpaul2012.com/the-issues/economy/
deregulation of banks & attendant lack of transparency in decision-making about financial products; tolerant attitude toward increasing concentration (oligopolies and monopolies); anti-union measures
Here are the class notes:-
Free Market Philosophies
-Night Watchmen Philosophy: the government should enforce rules that say- no use of physical force, no theft, no fraud; all contracts must be honored, and that?s all. The government should only collect taxes to administer and enforce these rules. (sometimes called libertarian) *no goal or objective-focused purely on process*
-Referee Philosophy: Goal- ensure full and free competition. Government will use force to break contracts when the contracts threaten full and free completion. **anti-trust laws and such- a contract is null and void if it threatens full and free competition**
Product differentiation is what oligopolies use as a deterrent for new companies to enter a market. By introducing many many brands under a few companies it increases the amount of competition for new companies when there are realistically only a few companies they must compete with.
-Protectionism: The goal is protect American Business from foreign competition. More or less what the night watch philosophy does with the exception that there mustn?t be a hindrance to American companies by foreign countries.
Inequalities of Wealth and Income – * in order for a free market society to give consumers what they want, the consumers must be well informed. *
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