Guy Sorman makes a persuasive argument that the free market system has indeed led to an improvement in the living standards of “millions,” in his book Economics Does Not Lie, A Defense of the Free Market. The book looks at economic instability, urging for reforms. It deals with and gives a catholic overview and insight into how previously stagnant economies, have risen to a substantial phase of growth, after the adoption of free market concepts, and goes on to state that this would be the best solution to ensure that many are uplifted from the state of poverty.
Why Stability is Essential for Growth
Economics Does Not Lie uses recent research to shed light on economic growth and relative performance of many nations. For sound economic development, it is essential for the economy to participate in and develop their private property; regulate the rule of law and the judicial systems; encourage enterprise freedom and stabilise the monetary systems, since they are the most important of the several factors that affect and contribute to growth. For example, when two countries have different labour hours, it would also lead to a disparity in labour market regulations, taxes and cost. This could, in turn, lead to a state of political and monetary instability that can then lead to stagnation in the economy. The book highlights how this was the case with the Argentinean economy, where such instability led to a reduced return on investment on the country’s capital, due to the increased risk.
How Entrepreneurship can Help
Entrepreneurship produces new ideas that contribute to the economy’s long term growth. With the birth of new ideas, there is a building potential that such ideas will be replicated and copied by others who want to stay alive in the market. However, having said that, there is no denying that innovation is important to keep the competition alive, which in turn becomes an essential part of the free market system. The book showcases research from Stanford University, which states that new ideas are indeed a crucial part of the free market economy’s growth. The onslaught of new ideas leads to a creative “rotation” or “destruction,” which drives market growth. We have seen this phenomenon when companies like Apple and Google entered the markets.
Developing Countries Support a Free Market
Economics Does Not Lie encases the experiences of many developing countries and how the free market philosophy has been an effective means to bring down the poverty ratio. Nations like South Korea and Taiwan have changed their heading and have now started focusing on meeting international demand with automobiles, electronics and textiles. This has led to the achievement of a high rate of economic growth and improved standard of living. After India’s move towards privatisation and international trade, economic growth has been at a constant increase, staying at an average of 8% every year. This only goes to highlight the efficacy of the free market system.
Unlike India, South Korea and Taiwan, the book presents that the economies of Europe and Japan are facing a decline. This can be attributed to the fact that the infiltration of new blood into the economy is not as high as in the other countries, although Japan has one of the highest numbers of yearly patents.
Overview: Economics Does Not Lie
The book is a non-methodological description of how free markets work; about the economies that supports it and their striking growth within the past few decades. Written in a manner that is non-technical and easy to understand, it is highly recommended for people who wish to understand the concepts of the world’s economy and their future projection.