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+--- Thread: What are the pros and cons of a Social Market Economy? (/thread-105465.html)
What are the pros and cons of a Social Market Economy? - James - 02-26-2014 09:59 AM
I need at least five pros and five cons, detailed answers would be appreciated. By social market economy, I don't mean a socialist market economy or market socialism. Cheers.
- simon - 02-26-2014 10:09 AM
More jobs to entry level. Uk workers. Good working conditions. Trade Unions, new opportunities to young entrepreneurs, more income tax
Bad
Super tax for big companies meaning they will avoid tax and bank off sure (amazon). Unions will strike willinillie. Rules against monopolising will put off overseas investors. It's another name for capitalism and it was a German Dictatorship idea
I hope I helped
- Anjaree - 02-26-2014 10:25 AM
A social market economy was developed in Freiburg in association with von Hayek. It has been the foundation of German economic miracle.
Pros.
1. it will raise productivity.
2. it will raise security in life.
3. it will raise saving and capital formation.
4. it will raise competition among big businesses.
5. it will raise human capital.
Cons.
1. higher deadweight loss, due to government intervention and regulation.
2. lower comparative advantage, due mainly to higher taxes.
3. lower movement of factors of production, especially labors, across the border.
4. moral hazard.
5. people will get shocked to the system, due to bureaucracies and red tape.