India’s Poor and Free Market, Essay Example

A1. The government’s surplus policy ensures the survival of agricultural sector through high profit margins. The high profits will continue to encourage productivity and further innovation in agricultural technology. Thus, this policy has the potential of making India even a bigger player in the world’s food market. Agriculture is still a huge sector in India and a significant proportion of the country’s population is employed in the agricultural sector. Even though the food rationing by the government could be used to ease hunger, doing so may threaten the livelihood of even greater number of people than those who are starving.

A2. In free market economy, resource allocation is determined by the forces of demand and supply. The supply has a positive relationship with price while demand has a negative relationship with price. When supply increases or demand decreases, prices go down and vice versa. This explains why the Indian government buys the produce of agricultural sector because the demand keeps the prices earned by the farmers high. This also explains why the government rations a significant proportion of its purchases and why the farmers oppose the distribution of rationing to those starving because an increase in supply would lower the prices of agricultural products in the country.

A3. Capitalistic markets can be free and fair but still unethical as the article shows. This is because resource allocation is motivated by profit which explains why governments often provide security services and transportation infrastructure even in capitalist economies. Capitalist markets are not concerned with the overall welfare of the society unless there are profit opportunities involved. In addition, welfare activities often demand inefficient allocation of sources. One great example is drug companies who earn attractive margins and whose most expensive drugs are often unaffordable by the majority of the population. Drug companies charge high prices due to the research costs and high risks involved in their line of business and their actions are free and fair yet unethical because high prices mean some patients may die since they could not afford the drugs.

A4. Even though politicians have a fiduciary duty to make decisions that are in the best interests of the people, in reality politicians do not really ignore their personal interests. They need supporters with resources for funds and groups that hire lobbyists cannot only provide funds but also votes and connections. This is why farmers have been winning against the starving population because farmers have power and resources which the poor Indians lack. Groups are usually more concerned with their individual interests than with the overall welfare of the society which is why farmers have been pressuring the Indian government to not increase supply by distributing its food rations. This also shows that politics and economy are always intermixed because political decisions often have economic consequences for different groups which is why groups with resources seek political influence to ensure favorable policies.

Article 2 A1. Capitalistic free market system is concerned with profit maximization that’s why their goal is achieving greater efficiency with resources of production including people. Now job security is more a dream than reality and employers know they can take advantage of the competition among employees for jobs. Thus, they can force the employees to increase their productivity even at lower salaries because there is no lack of available talent in the labor market. The demand of labor exceeds the supply of jobs in the market which puts the pressure on the employees to show better performance or else risk losing their jobs to those who may be willing to do the same work for less.