Question

Free Trade: Markets

1. How did Hong Kong end up having a free-market economy?
2. What type of economic growth has Hong Kong had over the past 50 years? Has it changed since 1980 when Milton Friedman was there?
3. According to the movie, what is, “self-interest?”

Free Trade: Creative Destruction

1. How has Mr. Cheung adapted to the demands of the market?
2. What is, “creative destruction?”
3. How do people in developing countries use cell phones differently than people living in advanced economies?
4. Why is the economy not a zero-sum game?  
5. How has the cost of cellphones changed in terms of hours of work?
6. What type of person benefits the most from free markets?

Answer 1

Free Trade : Markets

1. The economy of Hong Kong is a highly developed free-market economy characterised by

• low taxation
• free port trade
• well-established international financial market

Its economy is governed under positive non-interventionism, and is highly dependent on international trade and finance.

2. The economy of Hongkong has been very successful from past 50 years as they have a very low production cost. Their businessesman but ras materials from any cheap markets. They don't reply (depend) on government for expensive. That also pays low taxes. That's why there economy in terms of free trade markets is successfully developed as compared to other countries. China has developed their economy on a very large scale.

Milton Friedman was an American economist who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the complexity of stabilization policy.

Free Market : Creative Destruction

If a firm becomes unprofitable, then it should close down so that resources, (labour and capital) can move into more productive and profitable firms and industries. Without this willingness to change, we must go back to the 19 century rules and standards.

Creative Destruction

Creative destruction refers to the incessant product and process innovation mechanism by which new production units replace outdated ones. It was coined by Joseph Schumpeter (1942), who considered it 'the essential fact about capitalism'

The best example for creative destruction would be "Netflix" or being " Netflixed"

"The economy is not a zero sum game"

​​​​​​Yes! This statement is absolutely correct that en economy is not a zero sum game. As the sum of the gains and losses of all players does not equally zero.

The undeniably growing wealth disparity shows far more clearly than income distribution which groups have benefited from the economic growth of the past to a more significant degree.