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What are the pros and cons of a Social Market Economy?
02-26-2014, 10:25 AM
Post: #3
 
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.
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[] - Simon - 02-26-2014, 10:09 AM
[] - Anjaree - 02-26-2014 10:25 AM

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