Economics - Macroeconomics Economics Various Essay

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S. The societal system practiced in France serves as a model towards which the U.S. aspire.

President Barack Obama's healthcare reform plan is considered by many as being a socialist experiment that will significantly hurt the economy (CBS, 2009). In opposition, the President has stated that he does not intend to implement a healthcare system that depends on the government. Instead, he would prefer a system in which the government competes with private insurance companies for selling coverage.

The Invisible Hand Principle

The invisible hand principle was developed as an opposition to the protectionist system. This principle is actually a metaphor describing the self-regulating characteristic of the market. In other words, such a system can be implemented due to a combination of factors, like self-interest, competition, supply and demand. Adam Smith, who developed this theory, considered that the action of these forces and their effects are able to allocate resources within the society.

However, this concept was strongly criticized in relation with the economic and financial crisis that is currently affecting the U.S. And the rest of the world. Nobel Prize winner Joseph Stiglitz considers the invisible hand theory as being a myth. As mentioned above, the invisible hand theory states that the personal interest of economic agents activating in the market is capable of determining the way resources are allocated within the society in case. But it seems that the personal interest of bankers in the U.S. led to a wrongful allocation of resources, and to the economic crisis.

Furthermore, the state had to intervene in such a situation, proving that the invisible hand theory is not suitable for today's society. This is why the government had to take over Fannie Mae and Freddie Mac (Obama, 2009).

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Conclusions

Theories like the opportunity cost concept, capitalism and socialism, and the invisible hand principle are able to illustrate the economic conditions of certain periods. They are often referred to when trying to establish what is going wrong with today's globalized economy. They are compared and analyzed in order to establish which system is better, in order to avoid situations like the economic crisis characterizing the world today. But one cannot find a correct answer for these questions. For example, although was thought to lead to economic growth for the society as a whole and for each individuals, the greed associated with capitalism led to this financial and economic crisis. Also, the case of France, which stimulates cultural projects in the first place, has managed to improve its situation and to fasten its recovery from the crisis, in comparison with countries like the U.S., Britain, or Germany. This proves that a centralized, state-directed economy is more efficient in such economic situations.

Reference list:

1. Eddlem, T.R. (2009). Obama needs to learn "opportunity cost." The New American. Retrieved February 26, 2010 from http://findarticles.com/p/articles/mi_m0JZS/is_15_25/ai_n32369481/?tag=content;col1.

2. Dorrien, G. (2009). Is the Economic Crisis a Sin? Newsweek. Retrieved February 26, 2010 from http://www.newsweek.com/id/206095.

3. Steele Calls Obama Health Plan "Socialism" (2009). CBS News. Retrieved February 26, 2010 from http://www.cbsnews.com/stories/2009/07/20/politics/main5174417.shtml.

4. Remarks by the President on Financial Rescue and Reform. The White House. Retrieved February 26, 2010 from http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-on-Financial-Rescue-and-Reform-at-Federal-Hall.

5. Schwartz, N.D. (2009). France, Unlike U.S., Is Deep into Stimulus Projects. CNBC. Retrieved February 26, 2010 from http://www.cnbc.com/id/31772653......

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