Pros and Cons of Mixed Economy

A mixed economy is an economic system that blends elements of market economies with elements of planned economies, free markets with state interventionism, private enterprise with public enterprise.

The joint sector is jointly run by the government and the private companies. One of the main aims of the mixed economy is social welfare.

Pros and Cons of Mixed Economy

Pros of Mixed Economy

  1. Equal distribution of control

There is an equal distribution of control of both the public and private enterprises. This makes every member feel comfortable in its operation as there is fairness.

  1. More job investments

Most private companies will make a profit by cutting down on the number of employees in the company and this will make them source for jobs elsewhere hence investing in jobs.

  1. High chance of government to implement good policies

Government regulations come in this type of economy where the market is failing. This means that a region will have more space and opportunity to grow its economy.

  1. Improve Living Standards

A mixed economy will allow people in the country not to suffer from poverty as it will have opportunities to allow people to improve their standards of living.

  1. The government will play its role in the businesses

The government will focus on the market of the products to improve the economic stability of the country hence a country will not suffer from economic instability.

  1. Private enterprises will have freedom

Private enterprises will have the freedom to thrive on their own and this will improve the economic status of the country as the private enterprises will strive to make a profit which will make the money to be in circulation.

  1. The efficiency of private enterprises

As the private enterprises will be left on their own, this will make them more efficient in their operation hence beneficial to the country.

  1. Healthy competition

There will be healthy competition between the private and the public enterprises hence it will increase the production of quality goods.

Cons of Mixed Economy

  1. Higher taxes

The government will impose high taxes on the businesses and the products as there will be high competition in the market and this may not favor other businesses.

  1. Limited company sizes

The government may put rules that limit the operation of the companies and this may lead to monopolies in the market which may, in the long run, result in the production of inferior goods.

  1. Excessive intervention from the government

By allowing free markets, the government will get involved in the businesses which may affect the running of the businesses negatively.

  1. Challenge in finding the balance

There will be a challenge in finding the balance between wealthy equality and the freedom of the market.

  1. Less individual freedom

A mixed economy tends to lean more towards the government side not allowing the individuals to have the freedom to control themselves.

  1. Unsuccessful regulations

The regulations from the government may affect the businesses negatively affecting the production of the products hence doing more harm to the country.

Summary

If the mixed economy is not managed well it is bound to fail. The private enterprises also need the government in their running for them to understand some of the rules and regulations in businesses.

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