Question

•       Compare and Contrast a system of natural liberty vs. economic initiative (very briefly); and state the five principles of economic freedom.

Answer 1

Natural liberty is the freedom in which human beings as well as animals posses . It is referred to a state in which human beings have the freedom to act accrding to their wish .It is not controlled by laws or social structures.Economic initiative favors involvement on behalf of the government in the market in the interest of the public.The government involvement in the market economy or involment by any international institution with an effort to have an impact on the economy in addition to the regulations of fraud , enforcing contracts, providing public goods etc. Thus economic initiative is intervention by the government in the market solely in the interest of the public.Natural liberty on the other hand is removing government restraint so that free people can take action to manage their property and live life in their own preference as long as it does not harm any other person.This is the difference.

The natural liberty according to Adam Smith emphasied on freedom of initiative in an attempt to find economic opportunities that would bring the common people out from the clutches of poverty.So natural liberty is for the common people in general and economic initiative ie intervention by the government is also in public interest.This is the similarity.

Economic freedom is the capacity to grow by the free exercising of economic activity and allowing others to prosper as well.The 5 principles of economic freedom are property rights,rule of law , free trade,a constututionally limited government and sound money supply.

Property rights are very clear rules of authority enforced by the state which describes  the way resources should be used . Such rules are very well defined as well as  free from corruption and gives confidence to the people to invest in private property.

Rule of law gives us a clear understanding of the resources available and gives us power to better plan our choices.Rule of law is brief , undeviating and orderly implementation  of 3 fundamental democratic principles like supremacy of the law,equal protection under the law and liberal enforcement for infractions of the law.

Free trade/open market-Free trade allows countries to compete in the global market by the production of high quality and low cost goods and services and providing to the consumers .This incentivizes the nations to open new business opportunities as well as create new job opportunities.

Constututionally limited government-By passing regulations and creating dependency as well as curbing the opportunities for individuals and businesses , unlimited government stops economic progress. A limited government on the other hand stops government intervention by giving people the power to vote.

Sound money supply-Protecting the value of the dollar , protects investment thus enabling creation of jobs which leads to the prosperity of the US..