Free-Market Model of the Economy

free essayThe Anglo-American free-market model of the economy refers to a free-market model of the economy in which there is a flexible labor force, low levels of government involvement, and high levels of private entities’ rights. The Anglo-American free-market model of the economy is a capitalist model that emphasizes on the low levels of regulations in the economy, low taxation levels, and a public sector that progressively provides fewer services to the public (Sassen, 2015). From a general perspective, the Anglo-American free-market model of the economy results in increased ease of conducting business and highly integrated business interactions among countries in a formula that many European countries consider exploitative (Potrafke, 2013). Often, the model is compared to the European social welfare model that emphasizes more on the rights of the labor force, insists on government involvement in the redistribution of resources in the economy, and focuses more on the protection of the labor force against poor working conditions as well as the firing of workforce (Faux, 2016). The proponents of the Anglo-American free-market model of the economy assert the fact that the United States appears to develop faster than other nations such as Britain that had an upper hand in civilization. They cite the continued struggle for development in Eastern Europe and the failure of nations such as Greece that have more exposure to the alternative to the Anglo-American free-market model of the economy. On the other hand, those opposed to the economic model cite high levels of inequalities, both in wealth acquisition and in the labor force; they also cite the increased corruption levels in the US corporations as well as the unfair labor practices embodied by the United States’ corporations in the sweatshops that they operate in developing economies in Asia and Africa.

With the understanding of the Anglo-American free-market model of the economy, it is important to look into the phrase from the model, which says, “globalization is the logical progression”. Globalization refers to the continued integration of global economies and the continued interdependence of the regional, national, and local economies across the world. Globalization entails intense flow of goods, services, technology, capital, and human resources across national and regional boundaries. In light of the subject matter in this case, globalization can be loosely demonstrated by the continued integration of the American and European economies, the continued outsourcing of production activities to nations with lower labor costs, and the continued labor export and brainwashing of human resources in underdeveloped and developing nations to economies that appear to be more successful. Considering this definition of globalization, it is also important to consider what progression from the Anglo-American free-market model of the economy entails, as used in this context (Wade, Minister, and Reagan, 2014). Progression refers to continued movement from something, in this case, the movement from the ideals of the Anglo-American free-market model of the economy. Consequently, the question here regards whether the globalized economy is moving closer or further from the ideals of the Anglo-American free-market model of the economy. In answering this question, the essay will look at how closely the ideals of the globalized economy relate to the ideals of the Anglo-American free-market model of the economy. More focus will be on the British labor force and how the globalized force has influenced labor relations (Colvin and Darbishire, 2013). Additionally, the essay attempts to draw an opinion on how globalization influences the working conditions globally. At the bottom line, this paper asserts that globalization is not a progression from the Anglo-American free-market model of the economy ideals. Rather, it is the empowerment of these ideals by reaching out to more states globally, and this includes the British labor market.

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The other concern in this study relates to whether the globalization produces tougher and poorer working conditions. Based on the understanding of what globalization ideals are, it is true that it inevitably produces tougher and poorer working conditions. The assertion is based on various observations. Firstly, globalization is more focused on increased operational efficiency in corporations. This efficiency comes with the deployment of more technology than labor capital. Secondly, the recent Brexit vote confirms the dissatisfaction of the labor force in the United Kingdom with the ideals of the global economy in the sense that it pushes the efficiency envelope too hard, exerts pressure on the welfare capitalism that characterizes several nations in Europe including Britain, and the emphasizes on the profitability of corporations working in Britain over and above the welfare of the citizens, as has been emphasized on in the past (C?t?, 2014). These characteristics of the globalized economy and the relationship with the Anglo-American free-market model of the economy are discussed in detail in the following few paragraphs. More focus is accorded to the British labor market.

The British labor market has progressively moved from the welfare capitalist economy ideals and closer to the Anglo-American free-market model of the economy ideals. The nation is continuously reducing the exposure to the labor market social welfare costs, which include high costs of doing business in the nation, lower rates of economic growth, and high rates of underutilization of labor in the nation. Now more than ever, the British labor market is increasingly seeking labor resources at lower costs; and though the nation has not opened up its borders to nations that are sources of cheap labor, there are companies in the region that have continued to outsource production activities to nations with labor competitive advantages (Currie and Teague, 2015). Notably, the outsourcing of production activities leads to lower levels of open positions for employment in the country. According to the research, the rate of unemployment in the UK has continued to widen since the last global financial crises. The growing rate of unemployment is not a result of slow economic growth, as many analysts may have indicated in the past. Rather, it is a result of the continued globalization of the corporations with operations in the UK as well as the continued freezes on employment. Notably, firms have continued to grow from the last global financial crises, with the profitability growing and the economy expanding (Palley, 2013). However, the economic development is not adequately reflected in changes in the British labor market.

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Major changes are taking place in the British labor market, with the continued outsourcing of job opportunities to the Asian countries. The public sector has continued to be the greatest contributor to the British labor market, although continuously entrenched into the country’s economic development. However, the developments in the labor market characteristics have been the main reason as to why the private sector has either frozen or hired minimally from the British labor market. Notably, the British labor laws are more focused on the welfare of the workforce than on the welfare of the employer. The contributions to social welfare considerably raise the cost of labor (Faux, 2016). Additionally, there is a continued focus on changes in the standard labor hours, strong focus on the days of leave for the British labor force, and increased lobbying for the rights of the labor force. These conditions lead to increases in the cost of labor, and it is for this reason that the UK companies are increasingly considering outsourcing of production activities to nations with more lenient labor laws as well as nations offering labor competitive advantages. Outsourcing of production activities leads to more stringent hiring requirements in the British labor market. The job seekers are continuously required to accept lower compensation, and additionally, the labor force is required to continuously improve skills in order to continue competing with the global labor market. Notably, the welfare capitalism in the British labor market does not offer incentives for the labor force to improve skills, as the laws provide for lenient recruitment processes. However, as the labor resources become more mobile in the globalized economy, the British labor market is required to improve skills, and this requirement becomes one of the factors that are interpreted as tougher and poorer labor market conditions in the UK. Notably, the movement to global thinking is the reason behind the tough fluctuations in the UK labor market; and with the Brexit process still underway, the labor market is set to continue feeling pangs of globalization. It is important to note that, with Brexit, the region is likely to continue appreciating more of globalization and the Anglo-American free-market model of the economy despite its impact on the labor markets.

Looking into examples of the impact on the British labor market, the unemployment still stands at 4.9% and 21.5% of the nation’s working-age population is inactive (Office for National Statistics, 2016). To understand the movement in these statistics, the research looked into the hiring rates of corporations in the nation. Statistics indicate an increasing number of expatriates working in the region. Expatriates holding managerial positions are mainly from other European nations and from the United States (Office for National Statistics, 2016). On the other hand, EMEA countries continue to contribute large numbers of technical staff to UK companies (Dancygier and Walter, 2015). These observations are a result of continued globalization of the labor market, entrenched Anglo-American free-market model ideals in the labor force, and the continued focus on the financial gains of companies over the social welfare among other such factors (Orr, 2016). Considering the facts presented herein, the continued expansion of the global economic ideals is seen as a continued advancement in the Anglo-American free-market model of the economy, hence the conclusion that this is the major cause of the tougher and poorer working conditions in the British labor force (Currie and Teague, 2015).

In conclusion, this essay discusses the impact of globalization and the Anglo-American free-market model of the economy on the British labor market. The paper takes the position that globalization does not progress or deviate from the Anglo-American free-market model of the economy. Rather, globalization expands on the model by increasing liberalization of the global markets and enabling companies to operate efficiently across all national jurisdictions. The model allows companies to outsource job opportunities to regions that provide cheap labor. It allows nations to exchange technology and also allows the world to sell what they have competitive advantages in. Globalization and the Anglo-American free-market model of the economy ensure that human resources are utilized optimally and that the costs of labor are maintained at a minimum while the output is maximized (McLaughlin, 2015). Additionally, the model ensures that at least the global labor standards are followed and not the focus on social welfare labor policies that are considerably skewed against the employer. Considering these factors in light of the British labor market, it is easy to understand why it appears to produce tougher and poorer working conditions.