By DARLINGTON CHILUBA A FREE economy does not penalise entrepreneurship. A free or mixed economy enables both entrepreneurship and guarantees social protection. A mixed or decentralised economy thrives on consultative intellect to ensure that there is no market failure and by extension, that the safety net does not collapse. In other words, the financial services sector must be buoyant, efficient and safe. Market failure essentially means the erosion of financial value which could either be a failure of businesses to repay loans to banks, or shortfall of cash within an economy resultant of government policies. In the first example, two scenarios suffice: the subprime housing crisis in the United States of 2007-10 that resulted in a collapse of the mortgage market and borrowers failed to repay loans to the banks thereby causing a toxic absence of cash in the financial sector. The second is Malaysia 1997/8 when the housing market also collapsed and caused investors […]
ECONOMIC THEORY VERSUS REALITY II
