Thursday, September 04, 2008

Free Market and Socialist economics

In Free Market Economics, Government allows anybody to do business without any restrictions.
In Socialist Economics, Government does not allow everyone to do business. It puts restrictions on who does the business and in what terms etc.

In Free Market Economics, the people decide the fate of the business. Depending upon the demand and supply, the price increases or decreases. If there is more demand, then new people/companies may start the business, and increase the supply.
In Socialist Economics, if there is discrepancy in the demand/supply, Government has to take appropriate actions for that.

I feel, Indian Government should not do business. It should follow Free-Market economics model. If it follows socialistic model, it has to do the following.

  • Whenever there is a change in the demand and supply, Government should take adequate steps to balance. Till it balances those, Either people or Government will suffer.
  • Whenever there is a change in the operation of the business, Someone in the government has to approve it. For example, if the business needs more money, Government has to approve it, and it takes significant time.
  • The Prime Minister or Chief Minister must be good. Either PM/CM should take the direct responsibility of the organization, or entrust the responsibility to a sincere, honest, and talented leader.
  • The leader should make sure that, there is no corruption at any level in the organization.
  • The leader should make sure that, all the employees are working in the best interest of the organization.
  • The leader should be aware of the opportunities to improve in the organization.
  • The leader should do everything to make sure that people do not suffer because of the inefficiencies in the organization.
  • If a new technology, or process makes this entire organization obsolete, still they should adopt the new technology and process, even it means closing the organization. Our Indian government (Present or past, and I don't expect even in future) can never do this kind of thing, because, it feels sympathy towards the employees of the organization. That's why, it did not allow VOIP for a long time, eventhough, many small and poor countries are getting huge benefit by that.

There are many more things like this. If the government does not do even one thing, then people will suffer by that. Only in ideal world, government can do this kind of things without making people to suffer.

Where as in free-market economics, these problems will not arise. All the companies compete with each other, and tries to provide best service at the least price. They know that, any corruption in their company will lead to the collapse of the company. They will not hesitate to adopt new technology to provide services for very less price.

P.V.Narasimha Rao, Vajpayee, Manmohan Singh, and Nara Chandrababu Naidu follow(ed) Free-Market Economics. Rajeev Gandhi was in between these two models, and rest all Prime Ministers followed Socialist Economics.
Present Congress (Except Manmohan Singh), and Communist Parties follow Socialist Economics.
BJP, and TDP follows Free-Market Economics.

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