Until the early twentieth century, countries that were democratic were viewed as the most prosperous in the world; democracy is the freedom of the people to choose leaders by way of voting. Democratic countries like the United States of America had prospered economically, with high levels of Gross Domestic Product and high per capita income; Apart from democracy, the United States also prospered as a result of its abundant resources. In the early nineteenth century however, researchers came up with different reasons that lead to success of nations. John Stossel a researcher and a psychologist studied and wrote reports about the reasons for prosperity in nations like Hong Kong and America as well as reasons for lack of prosperity in other nations like India.
According to Stossel, economic freedom is attained when the market is free from many government regulations; businesses are free to produce the goods and services that they want and consumers have the freedom to choose what to consume. The researcher argues that nations with economic freedom like Hong Kong perform better than those nations that have no economic freedom such as India. He also notes that even if a country is not democratic, it can succeed if it has economic freedom; for example, Hong Kong is not a democratic nation but it is the world’s most prosperous nation because of economic liberty. John Stossel therefore thought that democracy alone without economic freedom is not enough for a country to succeed; he thinks that economic freedom is a sufficient condition for prosperity while democracy is a necessary condition.
John says Hong Kong has been doing better than India because of less government regulation. The government of Hong Kong performs duties such as giving business permits to businesses and providing defense in the country. It does not decide what people consume nor does it decide what businesses produce. In India however, the administration decides the type of products to be consumed by the citizen and the type of businesses to operate in the market. This means that markets in Hong Kong are freer than markets in India. The two governments however play a similar role of providing licenses and permits to people who are starting new businesses. The difference in this role of government in these countries is that in India, it takes a longer time to acquire a license and begin operations compared to Hong Kong. This is because of the bureaucracy that is present in India; bureaucracy is a condition whereby one has to pass many stages before acquiring a trade permit or a license. In order to begin business operations in India, a person has to get approval from the government, a trade permit and a license. To get approval from the government means that, the politicians have to discuss your business idea and decide whether to allow or discard the idea; this process takes up to one, two or more years. On the other hand, the process of acquiring a license and permit in Hong Kong involves filling out a single form and getting approval from the authorities in twenty four hours. Having studied the weaknesses associated with government regulation in India, John advises government to allow free markets in their economies for them to achieve better results. He notes that democracy alone without free markets in the state leads to failure as observed in India.
Countries with abundant resources such as America achieve better results economically than countries with insufficient resources. Despite this fact, Stossel notes that lack of freedom to utilize the resources in a country would lead to a situation where states with scarce resources to perform better than the states with plenty of resources. He concludes this after noting that Hong Kong’s’ performance has risen above that of the United States despite of the fact that Hong Kong is an island with scarce resources. United states also experience federal regulation, although the regulations and procedures there are better than the regulations in India; this is why U.S. performs better than India. John also observes that high population cannot prevent growth of an economy. He says that a country with high population can prosper if the people are free to make their own decisions. Hong Kong for example has a higher population than India, but it achieves higher economic growth and lower levels of poverty than India. This has been possible because the people in India cannot make decisions that are not in line with the governments wishes even if their decisions are far much better than the decisions of the government. John therefore concludes that freedom is necessary for a country to achieve economic growth whether it has resources or not even when there is high population in the country. His conclusions are supported by the fact that Indians who migrate to countries like U.S. and Hong Kong put up businesses that create thousands of jobs and earn higher incomes than they did while at home.
John Stossel a researcher of the twentieth century observes that success in a country is achieved as a result of economic liberty. He says that a country with free markets performs better than a country with regulated markets even when it has scarce resources and high population like Hong Kong. The researcher argues that the regulations in countries like India act as barriers to entry for new businesses. Consequently, this impedes on the overall growth in trade with such countries as registered businesses may become complacent due to lack of new competition. Lastly, the researcher highlights that the rate of population growth has no direct relationship to the economic growth of a country. This is because some countries with high population growth rates have emerged as economic powers in their regions.
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