The Economic History of the United States Essay
The Economic History of the United States
Today, the United States has the most foremost economy in the global industry. It is the leader in trade and exchange and has embraced ideologies and policies that directly affect the performance of it’s economy. Among this is the policy of free trade which was strongly pursued and promoted by well known economist and scholar, Milton Friedman. Friedman has become an advocate of Adam Smith’s writings and highly agree with his ideas of free trade, competition in the markets, and the “invisible hand”.
Friedman’s contention is that the act of embracing free trade by the United States is one which will definitely benefit the economy in the long-run as opposed to embracing an economy that is highly protected and regulated by the government. The government is indeed essential to provide security and to make sure that orderly, stable, and lawful conditions are sustained and provided. However, governments cannot help but heavily intrude in economic and business affairs. Friedman sees this as a hindrance to the furtherance of achieving economic prosperity as well as a suppression of the freedom to choose.
The film provided valuable insights about the different developments of other nations to provide an overview of how free trade and government intervention and control has affected the development of these nations. Take for example Britain who used to suffer from smuggling and numerous lawbreakers. It removed all the duties and tarriffs on goods in 1846 and has become the workplace of the world, achieving an unprecendented rate of economic wellness. Japan is also among those countries which embraced a certain aspect of free trade when it broke away from it’s feudal society and isolation in 1868.
It has been rooted in the traditional and because of the opening of it’s market to the West traders and it’s embrace of free trade, Japan has since then become an economy that is highly competitive. It has adopted modern ways of production in it’s various industries which caused it’s economic boom. This economic freedom has further promoted human freedom. On the other hand, India after it’s freedom from Britain, has adopted a system that strongly relied on the government for central planning and control.
The weaving industry of India was heavily regulated and keenly controlled by the government. It never really prospered and the energy coming from human capital was stifled which would have produced more dynamic actvity. In this respect, other industries were sacrificed and until the present, India has never really modernized. In the case of the United States, it’s employment of free enterprise has currently provided an economy that is noteworthy because it provided the enjoyment of low prices, products that are satisfactory in terms of quality and high wages.
Adam Smith, in his book The Wealth of Nations, introduced the “invisible hand” which has been one of the foundations of free enterprise. This is very manifest in the United States’ economy in a way that it is human nature. The behavior of the Americans which places a big importance on the freedom to choose, provides an environment that is highly characteristic of the invisible hand at work. Self-interest which is very common to all, is the main key in the propagation of this phenomenon. The difference of the United States however, is it’s open acceptance of the cultivation of self-interest.
Because of the individual pursuance of self-interest, different producers have manufactured products in the aim of achieving profit from them. This in turn provided the needs for the consumers, who in the pursuance of their self interest, paid for goods that became the profit for the producers. This spontaneous order definitely explains the economic prosperity that the United States enjoy today. Furthermore, because of the invisible hand at work, competition at the market place has been cultivated and encouraged.
More producers have made goods that provided variety for people to choose. It is a known fact that consumers would definitely opt for goods that are of the cheapest price, and this competition definitely promotes a healthy economic environment when it is coupled by the sellers option to sell at a higher price. This applies to the domestic economy as well as to international exchange and trade. United States has suffered from protectionism as a political disease but it has risen above it and has not coward out of competing in the international market.
The lifting of constraints from the government with regards to international competition facilitated the United States’ advantageous strategies that explored the minimization of costs and maximization of profits. It has tapped cheaper overseas labor in the processing of raw materials and assembling of goods that are then sold domestically and exported abroad. However, arguments saying that this process will mean lesser jobs for Americans has been voiced out by others.
Despite the negative implication that this outsourcing of labor has, the United States has found means of going around it. It has took advantage of the free market of foreign exchange in the birth of export industries that have replaced jobs that might have been lost. This was only possible because of the alleviation of government intervention in international exchange and trade. Another instance is the support of small businesses that are currently motivated by the free enterprise policy of the United States. This small businesses provide more jobs for the American citizens currently.
Summing up, it can be assumed that free trade accounts for the United States being able to enjoy a high standard of living and if more barriers are removed, it promises an even brighter economic future. Free trade allows more goods and services to reach the United States allowing the American consumers to choose and enjoy goods at lower prices. This means more spending income or savings for a household. However, the positive effects of free trade is not limited domestically because it extends to a global scale.
With the embrace of a free enterprise, the freedom to choose is extended globally and influences more nations. With the right attitude of acceptance and undertaking the challenge of competition, other nations could take the steps that the United States have taken. With the right market reforms, economic improvement is definitely at hand. Works Cited PBS Free to Choose 1990 Vol. 2 of 5 – The Tyranny of Control <http://video. google. com/videoplaydocid=2798161794328252652&q=Milton+Friedman+Free+to+choose+duration3Along&total=15&start=10&num=10&so=0&type=s