Naked Economics Chapter 1: The Power of Markets

A nation’s wealth and well being is directly related to its economic stand point. America for example,-- with our vast amounts of resources from wealth-- we are capable of maximizing our utility towards benefiting disadvantaged American citizens through actions such as government funds. Considering a less wealthy country such as Zimbabwe they are tremendously disadvantaged in providing for their people because they lack in resources due to a fragile economy. National situations like Zimbabwe's represent the importance of a having a strong economy, but containing the right market is the first critical step towards an economically successful nation.

It's obvious that having successful economy is highly beneficial for a nation because it helps the country provide for its citizens, but what makes an economy successful? In chapter one of Naked Economics, Wheelan emphasizes the importance of having a free market or a market economy; basically a market that is not restricted and allowed to expand, grow, and adapt to its environment/supply and demand. Markets play a big role in benefiting a nation because it provides constant supply of products for consumers. Not only do buyers and sellers win, but it supplies a boost for the economy and citizens. Every sale is taxed and as sales rise inflation occurs which benefits the government more, and gives them incentive to invest for the better of the nation towards education and improvement of people’s lives. Markets create a never ending cycle that gives opportunity for even a nation in poverty to grow and expand. It gives motivation to individual workers and firms to work arduously and reach their full potential. Markets might seem like a simple concept, but it’s a universal business idea that gives a nation’s economy the potential to smoothly grow without being controlled by the government.

Communist central planning on the other hand is market economy’s evil twin. To simplify, it is a handicapped economy. The economy has no upside potential of growing or expanding due to it’s the dictating government controlling it. Wheelan brings up Russia’s failing economy because they are not maximizing utility. Products that are being demanded more are not being produced more or raised in price. Everything is stagnant and there is no focus to make more money. The only people benefiting are citizens that work for the government while famine for the rest of the population is increased and motivation to work is decreased due to no future in a better paying job. Wheelan emphasizing the negativity of communist central planning gives insight that a market economy should not be criticized because it gives a nation so much freedom to improve and reach its full potential. A market is so powerful because it’s the definition of the people. Every person in this world wants to be able to do something meaningful and be remembered before they die, and as a result the market is designed to be able give people the flexibility to build a better life and go beyond it.

Wheelan, C. (2010). Naked economics-undressing the dismal science. W. W. Norton & Company.