FREE MARKET COMPARISON

UNITED KINGDOM, GERMANY, AND FRANCE

TOPICS TO DISCUSS
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WHAT IS A FREE MARKET SYSTEM

UNITED KINGDOM
GERMANY
FRANCE
THE COMPARISON

FREE MARKET SYSTEM

A market economy based on supply and demand with little
or no government control.
Prices are determined by unrestricted competition between
privately owned businesses
A completely free market is an idealized form of a market
economy where buyers and sellers are allowed to transact
freely (i.e. buy/sell/trade) based on a mutual agreement on
price without state intervention in the form of taxes,
subsidies or regulation
Investopedia

UNITED KINGDOM

Free market was accepted since the 18th century

Current Freedom score of 75.8 ranked 13th
Ranked 5th out of 43 in Europe region
Buyers and sellers can freely transact with each other in
U.K, but the government can intervene at any time to
make decisions about public commodities and amenities
Citizens have to pay for the road network through a
petrol tax system controlled by the UK government
Encyclopedia Britannica Online. Encyclopedia

UNITED KINGDOM
Health care
Coverage is universal. All those ordinarily resident in
U.K are automatically entitled to health care, through
the National Health Service
Provided out of general taxation
U.K spent about 9.3% of GDP on Health Care in 2012
Goals to reduce health disparities

Heritage.org

GERMANY
Social Market System
a system in between free market and socialist planning.
Called The Middle Way.
Idea was brought into West Germany after World War II
Designed to protect the freedom of the market on both
sides of supply and demand.
Wanted Economy free of state intervention and domination
but also keep market fair and competitive.
The German Economic Miracle and the
"Social Market Economy"Retrieved

GERMANY
Socialism Aspect
Government makes sure that a competitive market by
containing monopolistic and oligopolistic tendencies.
Was aimed at protecting poor and farmers from the forces
involved in the market.
Most Expensive Welfare system in the world
The care for their citizens is very important
One of the highest tax rates
The German Economic Miracle and the
"Social Market Economy"Retrieved

GERMANY
Free Market Aspect
Openness to Global trade and investment
o High amount of exports- cars, engineering goods, etc.
Amount of items being exported balances out the
high taxes
Freedom score of 73.8 ranked 16th
o means that Germany is ranked 16th for a laissez faire
style economy.
Quality of life is second highest in the world
The German Economic Miracle and the
Most Germans are pretty well off
"Social Market Economy"Retrieved

FRANCE
Birthplace of laissez-faire
policy of minimum governmental influence in the
economic affairs of individuals and society
Recent Economic Model: state capitalism and indicative
planning (1945 to 1982)
Dirigisme - control of economic activity by the state
Over the past five years, Frances economic freedom has
waned as the size and reach of the government has
expanded
Current Freedom Score: 62.5 (Ranked 73rd)
Last 20 years, legal dos and donts are smothering growth
"France Drowning in Rules and Regulations, Critics Say." Washington Post.

FRANCE
Regulations flow from a desire to meet social goals, such as:
environmental protection
accident prevention
welfare
Ranked 1st in social spending at nearly 32% of GDP (OECD)
Overall government spending = 57% of GDP
France is the second largest exporter and importer in Europe
Government has pursued reform measures to increase the
economys competitiveness and flexibility

Economy: Facts, Population, GDP, Unemployment, Business, Trade

France Trade, Exports and Imports.

COMPARISONS

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Business freedom is a quantitative measure of the ability to start, operate, and close a business
that represents the overall burden of regulation as well as the efficiency of government in the
regulatory process.

COMPARISONS

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Trade freedom is a composite measure of the absence of tariff and non-tariff barriers that affect imports and
exports of goods and services.

COMPARISONS

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Fiscal freedom is a measure of the tax burden imposed by government. It includes both the direct tax burden in
terms of the top tax rates on individual and corporate incomes and the overall amount of tax revenue as a
percentage of GDP.

COMPARISONS

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COMPARISONS

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Monetary freedom combines a measure of price stability with an assessment of price controls. Both inflation and price
controls distort market activity. Price stability without microeconomic intervention is the ideal state for the free market.

COMPARISONS

In an economically free country, there would be no constraints on the flow of investment capital. Individuals and
firms would be allowed to move their resources into and out of specific activities, both internally and across the
countrys borders, without restriction.

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COMPARISONS

Financial freedom is a measure of banking efficiency as well as a measure of independence from government
control and interference in the financial sector. State ownership of banks and other financial institutions such
as insurers and capital markets reduces competition and generally lowers the level of available services.

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COMPARISONS

The property rights component is an assessment of the ability of individuals to accumulate private property, secured by
clear laws that are fully enforced by the state. It measures the degree to which a countrys laws protect private property
rights and the degree to which its government enforces those laws. It also assesses the likelihood that private property
will be expropriated and analyzes the independence of the judiciary, the existence of corruption within the judiciary, and
the ability of individuals and businesses to enforce contracts.

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COMPARISONS

Corruption erodes economic freedom by introducing insecurity and uncertainty into economic relationships.
The score for this component is derived primarily from Transparency Internationals Corruption Perceptions
Index (CPI) for 2010, which measures the level of corruption in 178 countries.

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COMPARISONS

The labor freedom component is a quantitative measure that looks into various aspects of the legal and
regulatory framework of a countrys labor market. It provides cross-country data on regulations concerning
minimum wages; laws inhibiting layoffs; severance requirements; and measurable regulatory burdens on hiring,
hours, and so on.

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Questions?