Discussion Postings

Discussion Postings

The Struggle between Social Equality and Free Market in Cuba
In Cuba, a struggle is underway between social equality and free market. Over three quarters of the population are employed by the government while only less than a quarter by the private sector. In the previous decades, the government used to provide free education and health care besides subsidized rents for tenants. Consequently, the prices of essential basic commodities were subsidized. However, today, this is no more and even the prizes of basic food stuffs have escalated. In fact, the purchasing power of the population has significantly reduced. The Cuban government can no longer provide essential goods at subsidized prices and certainly, the subsidies may be completely phased out in the near future. In addition, the wage rates and pensions for the retirees have significantly reduced and therefore, a big portion of the population has opted to engage in self employment so as to meet their basic needs. Besides, social injustice is expanding at an alarming rate due to corruption and other forms of social evils. The writer of the paper strongly believes that all these problems can be directly linked to an inefficient private sector in Cuba. As highlighted above, the private sector employs only a small percentage of the population while the rest is left to the government. The reverse to this could possibly save Cuba such that the government is left to undertake important issues of national importance while the private sector creates jobs for the domestic population (Prieto, 2011). In addition there could be arguments for market controls in order to ensure social equality and that the prices do not go beyond what the common citizen can afford.
Today, there are various groups in Cuba who have different opinions. One of such groups is the Participative and Democratic Socialism group that advocates for socialism in Cuba. This group was established with the core aim of bringing about social equality among all groups of individuals across Cuba.
A very big portion of Cuban population prefers capitalism and a free market economy. Such an economy will create economic freedom for the Cuban people. Most of the aspiring people to become future leaders in Cuba also advocate for capitalism. The supporters of capitalism and free market economy think the majority will benefit from economic freedom hence more production of goods in the country. The writer of the essay feels the supporters of capitalism will win. In his view, the vast majority is for this system and with more and more engagement of the private sector in the economy will create more jobs hence improved standards of living for the domestic population (Pagano, 2012).
The Benefits of Free Trade in the US
Since two decades ago, the US has established several free trade agreements with many countries across the world thereby fostering international trade, foreign relations hence giving birth to a very strong economy. However, the North American Free Trade Agreement that was put in place in the year 1993 has been questioned by many who strongly believe the trade agreement brought about a loss of jobs in the United States of America. From an economist’s point of view, this may be true. In fact, if countries rely on imports, and more particularly, finished goods, it implies less production in the country and therefore fewer investments hence high unemployment rates. However, this is not the case in the United States of America. This is because; the US imports intermediate goods in the form of inputs so as to produce other goods. In this regard, more jobs are created in the country. Indeed, the NAFTA has actually increased jobs in the United States of America (Handal, 2011).
The Biggest Current Market Failure in the US Economy
Market failure, refers to a situation where the private enterprises fail to produce goods and services more efficiently and therefore the government has to intervene so as to correct such failures. In addition, the government may also fail by use of inappropriate tools to correct market failure.
From an economist’s point of view, externalities are the effects felt by a certain group in the economy due an economic activity within the economy and could be positive or negative. A perfect example of a positive externality is when a consumer gets more of a commodity at a cheaper price. In line with this, the producer may scoop high profit levels by selling fewer units at a higher price or using the minimum possible cost in producing such commodities.
The US industries emit very high levels of harmful chemicals into the air. This causes environmental pollution that basically affects the domestic population as well as people in other countries. In fact, this has been on the rise due to unscrupulous private investors who undermine the importance of environmental sustainability. These private investors are not ready to use clean production techniques as this would result in greater costs. Such emissions have led to formation of acid rain, ozone depletion and damage of natural ecosystems all over the world. Despite the provision of commodities to the domestic population, such investors have failed to use clean techniques of production that would ultimately reduce pollution: a negative externality (Hetrick, 2008).
On the other hand, the market failure has been greatly exacerbated by the US government, which has taken the wrong approach in dealing with such market failures. The writer of the paper strongly believes that if the Federal government were to increase green tax, most investors would prefer clean production techniques in an effort to evade tax. This would consequently eliminate the market failure.
The Ethics of using Unconscious Nudges to Alter People’s Behavior
Nudges are means of affecting people’s choice without making alternatives more costly and are quite crucial because they avoid erroneous personal decisions. In fact, policy makers make use of individual’s flaws to help them make better decisions. Nudges can influence people’s choices as well as their behavior. According to Richard Thaler and Cass Sunstein, people have the tendency to adhere to any default option presented to them. This has been applicable in retirement saving program where behavioral economists advocate for automatic deductions on people’s salaries so as to enable them save for their retirement. From the writer’s point of view, nudges could be avoided. In the illustration by Thalers and Sunstein pertaining application of nudges to allow people save for their retirement, if the savers feel oppressed, they would use other means to evade this. For instance, workers may forego the rewards of their services of labour hence avoiding the default option as purported by the two economists.
From Thaler’s and Cass’s retirement saving’s example, virtually all policies contain some unconscious nudges and incentives. In most countries, there are several things citizens are required to do. However, the writer of the paper strongly believes that this may not be accomplished by use of only nudges. Certainly, there are other things that policy makers have to consider. Consequently, the policy makers have to use a lot of effort and incentives to initiate behavioral change across the entire population. Lastly, in an effort to make people change, it is crucial to ensure the policies put forward are essential to people’s lives so that they change. The writer of the paper strongly feels that policies closely related to provision of incentives to the population would possibly initiate some change (Sunstein, 2008).
In conclusion, it would be right to note that there is a struggle between social equality and free market in Cuba. Besides, there are two separate groups such that one of the groups supports capitalism while the other backs socialism. The ones supporting free markets and capitalism may eventually win since such a system has been fruitful in other countries including the US. In addition, the biggest current market failure in the US economy is global warming as a result of harmful chemical emissions into the air. Lastly, in a section of the book, Nudging People Towards Better Decisions, Richard and Cass Sunstein strongly support that nudges can influence individual’s decisions in the economy.

References
Handal, C. (2011, 3 16). Benefits of Free Market in the US. Retrieved from heritage.org: http:www.heritage.org/about/departments/ylp.cfm
Hetrick, S. (2008). The Greatest Market Failure theWorld has seen. Regeneration Journal, 1-4.
Pagano, M. (2012). The Second Revolution. Independent Journal, 1-7.
Prieto, D. (2011). Making Revolaution in Cuba. Havard Times, 1-6.
Sunstein, R. T. (2008). Improving Decisions about Health, Wealth and Happiness. New York: Yale Press.

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