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Syahrul Gunawan TUGAS 3 B ING

The author agrees that the principles of laissez-faire are no longer valid today. No country has ever had a 100% free market without any government intervention in the economy. Even the United States, considered a super free country, still uses tools like interest rates to control inflation. Additionally, the state plays an important role in stabilizing national and international economies and preventing devastating impacts from events like the Great Depression or global financial crises. While Adam Smith's ideas focused on competition and free markets, innovation is now a major factor for companies' survival and ability to pay employees higher wages.

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2K views1 page

Syahrul Gunawan TUGAS 3 B ING

The author agrees that the principles of laissez-faire are no longer valid today. No country has ever had a 100% free market without any government intervention in the economy. Even the United States, considered a super free country, still uses tools like interest rates to control inflation. Additionally, the state plays an important role in stabilizing national and international economies and preventing devastating impacts from events like the Great Depression or global financial crises. While Adam Smith's ideas focused on competition and free markets, innovation is now a major factor for companies' survival and ability to pay employees higher wages.

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Syahrul Gunawan

031189369
TUGAS 3

B. The principles of Laissez-Faire are not valid anymore in this


present time.
     Do you agree or disagree to the statement?

I agree with that statement because, until now it seems that there has never been any
country in the world that has released its economy 100% and let the invisible hand work
(there is no pure government interference in the economy). The United States which is
considered a super free country still uses the Fed rate to control inflation, reportedly at the
last meeting in July 2016 it was set at 0.25% -0.5%.

In addition, the late Adam also wanted the state to minimize taxes, because taxes are
considered only successful in raising the cost of living. Well, just imagine if this is used by
our country. The tax contribution is still the largest in the state budget.

In the years ahead, understanding laissez-faire or the like may never be achieved.
Inevitably the state is responsible for the national and international economic impacts. Just
look at the Great Depression in 1929 devastating the world economy, then the case of one
country Subprime Mortgage in 2008 namely the US undermined the economy to Indonesia.
Laissez-Faire is never relevant. Adam Smith thinks that the ups and downs of profits, whether
state or corporation (shares), can be caused by many things such as the salaries of employees
and the level of wealth of the population. The funny thing is if this condition is achieved, it
can have the opposite effect. A simple example like this: The company managed to increase
profits significantly, thereby increasing the salary level of its employees, it turns out that in
the future it will result in overload and lower profits.

Unfortunately I have not found the word innovation in this masterpiece, but at this
time what makes the company continue to survive and pay its employees at high pay is
innovation. Adam Smith realized that, so he said competition over the same product would
reduce profitability.

Metal which means gold, this seems to be one of the brilliant ideas that the world has
ever used but has abandoned. At that time Smith hoped this system would be able to
withstand depreciation due to the wastefulness of the government in financing the war.

If we take the simple logic, actually Adam Smith's idea of a metal-based (gold)
currency system is okay. The intrinsic value and the nominal value can be well predicted.
Currency volatility will also be controlled compared to the current floating system. I consider
the law of demand and supply only suitable for products, not for currency. Too wild!

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