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06 February 2009

Economy is rational allocation of wealth

As Obama said in his inauguration speech, "we ask today is not whether our government is too big or too small, but whether it works," good economical system does not mean capitalist economy.

 

As I recall my macro-economy course in U.S., definition of economy is "rational economy of wealth."

 

If only small number of people get most of the wealth, they would save most of what they earn, not using for consumption because they cannot do that even though they like jet-set life style. If the same amount of wealth was allocated to millions of workers, it will be all used up and circulated in the market and rejuvenate the whole economy.

 

 

Free economy, trickle down theory are old fashion ideas. Neo-liberalist economy resulted in today's financial crisis.

That doesn't mean socialist economy is better, it leads shortage of the goods like what happened in former Soviet Union.

 

Let's think about third way to create better system.

21:24 Posted in Politics, un-USA | Permalink | Comments (0) | Tags: economy

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