Economic freedom

A. Relationship between economic freedom and wealth fluctuations

The consequences of the 2009 Economic Freedom study by The Heritage Foundation, in concurrence with the Wall Street Journal, showed in general economic freedom straight correlates with the degree of economic prosperity. As shown in figures, higher “economic freedom scores” were recorded in states holding strong buying power, and higher gross domestic capital per capita. Harmonizing to the survey ‘s executive sum-up, the consequences show that the ground why prosperity is correlated with greater freedom is that the positive end product of these indexs encourage a “virtual rhythm of prosperity” by which economic freedoms will be farther enjoyed by these states. ( Heritage Foundation, 2009 ) .

This pupil believes that the ground why states basking “greater economic freedoms” such as Hong Kong, Singapore, Australia and the United States were besides among them most comfortable states is that their liberalized economic policies have allowed concern freer rein in operations and trading minutess. If we review back the parametric quantities of “greater freedom, ” these include “freedoms” in concern, trade, investing and belongings rights, factors which are critical in making a contributing concern atmosphere in a state. In add-on, freedoms by which a authorities is able to exert in footings of financial and pecuniary policies besides contribute to economic prosperity since a authorities which does non excessively intervene in economic policies allows market forces to find the class of the economic system. This pupil is of the sentiment that economic systems have more opportunities of thriving if market forces are allowed to find its class, every bit much as possible.

B. Country Case survey:

This pupil will take the Philippines as the state in focal point for this paper. The Philippines had placed 104th in the over-all universe rankings in the 2009 Economic Freedom Index, 20th in the Asia-Pacific rankings, and had an mean mark of 56.8, higher by 0.8 points than last twelvemonth ‘s mark of 56, but still belonging to the “mostly unfree” class. The state recorded worsening tonss in four economic freedom indexs ( concern, fiscal, trade, and labour. ) compared to 2008 while it recorded no important alterations in its tonss for the fiscal, belongings and corruptness indexs. The Philippines ‘ merely got little addition in tonss, compared to 2008 for authorities size, pecuniary freedom and investing freedom. In general, the state had merely above norm tonss in the indexs for trade, authorities size, pecuniary and fiscal freedom ; it scored ill in concern freedom, investing freedom, belongings rights and freedom from corruptness while the mark for financial freedom was more or less on the norm ( Heritage Foundation, 2009 ) .

This pupil had checked the rankings of the Philippines since 1999 and found out that it last passed the universe norm in 2003. It recorded below mean tonss from so on, with rankings changing in the center and high fifties. From the period of 2003 up to the present, the state has ranked among the states holding “mostly unfree” economic systems. ( Heritage Foundation, 2009 ) . Political stableness may play an of import factor in the hapless public presentation of the state even as it has accomplished some betterments in the economic system. In economic footings, perceivers had touted that the Philippine economic system had recovered, in seasonally adjusted footings, to 2.4 % in June from the 1st one-fourth ‘s slow growing, “thereby avoiding proficient recession ( Economist Intelligence Unit, 2009 ) Politically, the state has seen turns of political instability during the current term of office of President Gloria Macapagal Arroyo, who had been survived several impeachment efforts and even two military rebellions since 2003 ; coincidently the state reported its lowest mark for the decennary in 2005. In that twelvemonth, a wiretapping dirt sparked protests naming for the ejector of Arroyo as the Philippines ‘ 14th elective leader. ( Vitug, 2005 ) .

The 2009 Heritage Survey had listed some of the jobs faced by the state the old twelvemonth in footings of political, societal and economic challenges. These include: holding slow concern treating systems, “inflexible” labour construction, legion trade barrier mechanisms, “burdensome” revenue enhancement rates ( corporate revenue enhancement rate had been 35 % while concern have to pay belongings, heritage and existent estate revenue enhancements ) ; restricted foreign investing, and there is the” debatable enforcement of belongings rights.” ( Heritage Foundation, 2009 ) .

In amount, the Philippines falls short of the criterions set by Index because business communities have to cover with bureaucratic ruddy tape in carry oning minutess with the authorities, foreign trade is still inhibited by the presence of duties which adds costs to imports, over-all costs in making concern in the state is high because of the many revenue enhancements imposed by the authorities and that judicial adjudication is non dependable when it comes to seeking damages for amendss in belongings rights violation.

When one takes a expression at old studies on the Philippines, it seems that there have been small alterations in the advancement of the state ‘s concern and economic freedom. In 2004, after the election of Macapagal Arroyo as president, the state study had mentioned some of the same jobs this pupil had mentioned above: “The 2004 Index of Economic Freedom categorizes the Philippines as “mostly unfree, ” due in big portion to limitations on foreign investings and unequal legal protections for concern. The fundamental law restricts foreign investing, and there are an deficient figure of constabularies and Judgess. The tribunals are underfunded, corrupt, inefficient, and slow.” ( Dillon, 2004 ) .

Based from the informations mentioned from the present and old Indexes and state profiles, this pupil thinks that the Philippines still it has much work to make when it comes to achieving the 10 economic freedoms used as steps in the Index. In peculiar, its authorities should concentrate on bettering concern freedom, investing freedom, belongings rights and freedom from corruptness. The authorities should work on bettering the investing ambiance for business communities such as rushing up procedures for puting up concerns and licences. It should besides work on loosening trade policies such as cut downing duties on imported merchandises. The Filipino authorities should besides work on bettering the judicial system since it is a key in deciding issues in belongings rights challenges. This is to construct up the additions made by the state in the economic system which perceivers noted have been retrieving from the effects of the current recession ( Economist Intelligence Unit, 2009 )

In the terminal, all these solutions still lie in the political stableness of the Philippines as a whole. While there have no unfastened studies of efforts to unseat Arroyo, who is passing her last twelvemonth as president until 2010, still the Philippines ‘ political constitution continues to alter with the kineticss of horsetrading and powerplay. In add-on, the widely reported incidence of corruptness and other signifiers of malfeasance may halter attempts by the authorities, nevertheless sincere they may be, in doing the concern environment more contributing for investing which is one of the state ‘s current weakest points ( The Economist, 2009 ) . The authorities has to work it out if it wants to better the Philippines ‘ path record in concern, economic and political freedoms.

C. Alternative attacks to societal security

As discussed in pp.86-87 ( McConnell, et.al, 2009 ) , the Social Security System is already confronting projected lower gross bases in the following eight old ages. If this tendency is non mitigated adequately, so it will besides take to the diminution of benefits being given to members. The chief ground behind this diminution is the fact that much of the American population is acquiring older. While many Americans are eligible for benefits, there are merely fewer beginnings to refill the money used for this intent. And it seems that Americans are already seeing the warnings come true. This pupil had besides late read an Associated Press article, ( Ohlemacher, 2009 ) which reported that payments for Social Security will worsen for the first clip since 1979. This was because premiums have increased even as older people, who are the primary donees of Social Security, have been passing much on wellness attention.

If this pupil is given a opportunity to urge betterments to the system so she will propose that federal authorities increase the paysheet revenue enhancement and so impart 50 % of it into histories which would be maintained by persons. The history proprietors would hold to put the financess, either into bank certifications of deposits/ approved stock/bond financess. They can pull into these financess merely upon making retirement age ; nevertheless a “flat monthly benefit” will complement fund accretions in the histories. The pupil believes that this attack is more efficient in that it gives an single greater control over the investing of the financess allocated for societal security benefits ; hence the authorities will non hold to put financess for a general populace, which have contributed to the increased costs for the system in the current set-up. , irrespective of the sum of part each person has paid for.