29 October 2010 Comments Off on Open Economy

Open Economy

An open economy is often very politically difficult to create. Many governments finance themselves on tariffs. Connected industrial corporations always ask for tariffs to artificially increase the price of their goods on the local market. However, there is much intellectual understanding of the value of an open economy to the consumer.

Generally, if economic policies are designed with the worker in mind, there is a degree of tyranny against the consumer. Free and open economic policies force businesses to compete. While this doesn’t allow for artificially high wages, it does allow for an overabundance of consumer goods, which results in lower prices.

Tariffs seek to prevent competition. Many of the late 19th century industrialists believed that competition was bad for industry. This ancient paradigm proves more false by the day. Competition is the most just mechanic of the free market. An open economy allows companies in different nations to act as a regulator of one another. The best quality goods at the best price get the currency.

Open economies allow emerging markets to grow as well. They provide cheap labor. This has been viewed as bad when you look at their wages in terms of first world currency values. However, when their prosperity is viewed in terms of buying power and access to advanced goods, it is a major step up from the tribal economies that existed before.

The truth is, open economies force governments and big corporations to trim their costs and compete. This is why so many big interests often fight against these types of policies. Although many “free trade agreements” have been signed, most are managed trade agreements that do not allow for the true freedom that an open economy needs. The best place to see an open economy at work is on the internet. There are much fewer oppressive regulations which can reach the online marketplace. As a result, prices are low and small businesses can compete.

Comments are closed.