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).
Conclusions
Theories like the opportunity cost concept, capitalism and socialism, and the...
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