Hi. I want to polish my skills. I am aiming for a six pointer. Please critique! Thanks!
Opening up the economy is beneficial to any country. Removing restriction on the movement of goods and services into and out of the country create a level playing field which in turn will ensure competition, resulting in the best quality of goods and services.
The author concludes that an open market economy is better than a market with restrictions since it benefits the economy of any nation. The argument is founded on the premise that removal of regulations will breed competition which will in turn yield better quality goods and services. The argument, while somewhat persuasive, suffers from generalizations and untenable assumptions.
First, the author fails to evaluate the effect of competition by foreign companies in the domestic market. While the prices of goods and services may go down with the introduction of foreign competitors, it is entirely possible that this causes several firms and companies in the country to either shut down or reduce their production drastically, if they cannot keep up with the competition. In this event, it is not difficult to see that the reduction in prices can devastate a sector of the economy, perhaps beyond recovery. It is imprudent to assume without facts and figures that the indigenous industries can reduce their prices readily or that they can reduce production costs by making their processes more efficient. This is, among many other reasons, because the resource distribution over the planet is heterogenous. While one country has vast reservoirs of oil beneath its turf, another enjoys a monopoly in the best quality of diamonds. This inherent unevenness of production factors on a global scale makes it impossible for certain disadvantaged companies to compete. Another consideration is the possibility that a sector is relatively new and needs to grow before it can reap profits without incurring high costs.
Second, the author does not demonstrate that in adopting such a policy, the economic gains outweigh the economic costs in the long-term. Hidden penalties in the form of a depreciating value of the currency, barriers to new comers in the highly competitive market and an over-all dependence on foreign countries can prove to be detrimental in the long run.
Third, the author concludes that the policy of free market is "beneficial for any country". Such a generalization ignores macro-economic considerations. While one country might find that opening trade barriers results in healthy competition, the economic history of another country might render this decision suicidal. Consideration regarding the distribution and resilience of various industries, the maturity of the goods or service market in consideration and the long-term political ramifications of such a move need to be considered in relation to the policy.
The argument could have been strengthened if the conclusion had been more specific with regards to the type of economies the author refers to. It would also necessarily need to list the characteristics of a market and economy that benefits from such a policy and thereby eliminate consideration of other forms of the same while establishing the profitability of the policy.
In conclusion, the author's argument is only narrowly applicable and therefore unconvincing without a specified scope, a shortcoming that could have been easily overcome by applying some simple conditions to the original argument.![]()
Quote:
Opening up the economy is beneficial to any country. Removing restriction on the movement of goods and services into and out of the country create a level playing field which in turn will ensure competition, resulting in the best quality of goods and services.
The author concludes that an open market economy is better than a market with restrictions since it benefits the economy of any nation. The argument is founded on the premise that removal of regulations will breed competition which will in turn yield better quality goods and services. The argument, while somewhat persuasive, suffers from generalizations and untenable assumptions.
First, the author fails to evaluate the effect of competition by foreign companies in the domestic market. While the prices of goods and services may go down with the introduction of foreign competitors, it is entirely possible that this causes several firms and companies in the country to either shut down or reduce their production drastically, if they cannot keep up with the competition. In this event, it is not difficult to see that the reduction in prices can devastate a sector of the economy, perhaps beyond recovery. It is imprudent to assume without facts and figures that the indigenous industries can reduce their prices readily or that they can reduce production costs by making their processes more efficient. This is, among many other reasons, because the resource distribution over the planet is heterogenous. While one country has vast reservoirs of oil beneath its turf, another enjoys a monopoly in the best quality of diamonds. This inherent unevenness of production factors on a global scale makes it impossible for certain disadvantaged companies to compete. Another consideration is the possibility that a sector is relatively new and needs to grow before it can reap profits without incurring high costs.
Second, the author does not demonstrate that in adopting such a policy, the economic gains outweigh the economic costs in the long-term. Hidden penalties in the form of a depreciating value of the currency, barriers to new comers in the highly competitive market and an over-all dependence on foreign countries can prove to be detrimental in the long run.
Third, the author concludes that the policy of free market is "beneficial for any country". Such a generalization ignores macro-economic considerations. While one country might find that opening trade barriers results in healthy competition, the economic history of another country might render this decision suicidal. Consideration regarding the distribution and resilience of various industries, the maturity of the goods or service market in consideration and the long-term political ramifications of such a move need to be considered in relation to the policy.
The argument could have been strengthened if the conclusion had been more specific with regards to the type of economies the author refers to. It would also necessarily need to list the characteristics of a market and economy that benefits from such a policy and thereby eliminate consideration of other forms of the same while establishing the profitability of the policy.
In conclusion, the author's argument is only narrowly applicable and therefore unconvincing without a specified scope, a shortcoming that could have been easily overcome by applying some simple conditions to the original argument.