A. Coskun Samli

What Is a Market Economy

In a society, all people are consumers. They have to have goods, clothing, shelter, and medicines, among other things. But consumers do not produce for their own consumption. Products and services are produced by some people and distributed by others that form what is called the market system in general. The market system distributes the goods and services produced to all consumers.

Returning to the Market Economy

Perhaps the uniqueness and importance of the market economy is bottom up, starting with work based on the skill and toil of workers, creating wealth at the highest level. Exhibit 12.1 is based on this premise and is constructed as follows:

Financial Conservatism Does Not Work

Perhaps in normal thinking there is nothing more natural and necessary than for a family to balance its budget. But when such thinking is applied to the national economy, this becomes not too functional. In fact, that kind of thinking, which has been popularized by certain political circles, is major evidence of ignorance about the power of the market mechanism and is therefore an enemy of economic progress. In fact, I consider this orientation a disease and I call it budgetitis.

A Totally Unknown Concept: Marketing Multiplier

Our very dynamic and abused market system has performed very well under certain conditions. When financiers and big banks are focusing on creating investment products for profit rather than on allocating capital to borrowers, the market system does not work. When 93 percent of GDP goes to 1 percent of the population, the market system does not work. When in hard economic times government spending is blocked by the opposition party, the market system does not work.

Managing the Outsourcing

One of the problems relating to ignorance about the market system is that the system does not think, does not plan for future, and does not make provisions for expected and unexpected emergencies. The market system simply reacts one way or the other. Although it is not one of the major functions of the government as discussed in chapter 4, a major problem with the American economy is outsourcing. As globalization becomes more and more widespread, outsourcing becomes a burden or benefit for individual national governments in the world. Outsourcing, at the point of writing this book, is a major drain on the American economy. It exports well-paying jobs overseas and contributes to the national debt in big numbers. If the American system had a MITI (Ministry of International Trade and Industry) patterned after an older Japanese concept that detected the major drains on the national economy and developed counteracting measures, our economy may not have ended up in the current situation.

Needed: A Constructive Vision

Many years ago, an author (Bator 1962) had the following as an opener to his book: “Would you tell me please which way I ought to go from here?” (asked Alice), “That depends a good deal on where you want to go to” (said the cat). This is as relevant today as it was at that time regarding the role of the government. One thing, however, I particularly emphasize is that there is no successful organization that does not have a good administration. The national economy is no exception to that statement. The national economy can easily be considered an organization and always needs a very good administration. As was discussed in many parts of this book, we do not need a government that is being directed by dysfunctional and unsubstantiated dogmas or a government mostly inactive because of its ignorant background, but a very knowledgeable and proactive government driving the national market vehicle in the right direction. In the above mentioned book, Bator maintains that there is a domino effect in the national economy. If the economy is stagnating and the government starts spending, business follows immediately. These two forces accelerate consumer spending and the economy starts going in the direction that the cat should have indicated to Alice. The two conditions: first, reversing the 4 events—deregulation, income taxes, privatization, and merger mania and second, developing a proactive budget are in effect. The first condition, of course, is developing the infrastructure.

What Is at Risk

It is simply not possible to achieve the desired future by hanging on to the past. At this point of this writing, all attempts to make economic and social progress are basically blocked by those who are doing exceptionally well and hence they are resisting all of the activities and propositions that are proactive and will benefit the whole society. They are simply against change and therefore against progress.

What about Infrastructure? Lessons from International Experiences

It is extremely puzzling that our level of ignorance goes far enough to hurt even those who are against any economic activity to get the mighty American market system going. As has been stated throughout this book, a powerful opposition in Congress is opposed to any kind of economic activity. This group and its supporters are suffering from an acute case of ignorance. They have no idea that they are not only hurting the American economy but are also hurting themselves. Those people who do not want any economic change or economic progress are most likely to be part of a group that will benefit the most from any economic advancement; they should be championing economic progress possibilities. Among many other things, some of which are discussed in this book, infrastructure development is extremely critical for economic well-being and economic progress.

Innovation Is the Answer

In my earlier work (Samli 2012), I said that with ever-increasing indebtedness, very high levels of unemployment and lower rates of economic growth, the United States needs innovations. In my more recent work (Samli 2013), I stated that a major innovation that I call a radical innovation is likely to create major increases in employment, provide a platform for new industries to emerge, generate major revenues, and improve overall the existing quality of life further. In chapter 2 of this book, I discussed how the conservative orientation blocks major attempts to innovate and in chapter 4, I pointed out that the government’s first most important function is to help develop new technologies.

Government: A Leader and a Partner

Even at the risk of being redundant, I must talk about the leadership required for the economy to accomplish certain goals.