The book Common Sense Economics analyzes various key elements of economics and the factors responsible for economic progress. Besides, it describes the role of the government in economic progress and how practical personal finance aids in economic success and prosperity of an individual. Therefore, it is important for an individual to understand the contribution of the government and the role of personal finance in economic progress. This book is beneficial for individuals and the society as a whole since it gives the opportunity to apply common sense in various economic decisions so as to attain economic prosperity.
Trade and competition play a major role in economic progress. Trade allows companies to produce valuable goods which are needed by the consumers in the market trade (Gwartney, Robert & Seth, 2016). On the other hand, competition enables companies to become innovative. It is through innovation that companies will be able to compete efficiently in the market. Competition and trade are essential elements in the book that the society must understand. Competition encourages firms to use low-cost production methods to produce goods that meet the needs and wants of consumers in the market. In this case, competition creates value for the products manufactured by various firms in the market.
Different nations have varying levels of economic prosperity because they utilize different methods of production. The most developed countries enjoy favorable terms of trade since they employ low-cost and efficient technology to manufacture their products. This allows them to earn a substantial amount of income because they produce a variety of products. Government support also plays a significant role in promoting a conducive business environment that allows firms to operate a reduced cost by providing incentives trade (Gwartney, Robert & Seth, 2016). The use of efficient technology is a contributing factor towards economic development. The increase in economic activities as a result of trade is what promotes societal growth. The invisible hand also plays a significant role in economic progress since they direct both sellers and buyers to engage in economic activities that would spur economic growth. Members of the society also need to pay attention to entrepreneurship since it contributes to economic progress and financial success. Individuals need to think like entrepreneurs so as to achieve financial success
Paying attention to the various factors of economic progress is important. These factors include competition, legal environment, government regulation, capital market and free trade (Gwartney, Robert & Seth, 2016). The elements of economic progress are useful in making various economic decisions since they determine success of the economy. It is important for me to know the role of the government in promoting economic progress. The government initiates legislations that encourage private ownership of property. Private ownership promotes good stewardship and promotes effective utilization of economic resources. It is through private ownership that economic resources can be preserved for future use. Besides, it allows people to manufacture goods that are valuable to other people. Free trade plays a vital role in economic progress. It allows countries to participate in trade and obtain those products that they are not able to produce at a lower cost.
The practical personal finance as explained in the book allows me to understand proper economics and financial planning trade (Gwartney, Robert & Seth, 2016). Personal finance enables one to plan well and take control of his or her finances. The practical personal finance will allow me to invest in those ventures that would generate a substantial return on investment. The ideas presented in the book encourage one to develop sound financial plans which are required to obtain economic prosperity. Sound financial planning enables one to evade any form of an economic disaster. As an individual, I find necessary to appreciate the power of compound interest personal savings since it allows one to achieve economic prosperity.
- Gwartney, James D., et al. “Common Sense Economics: What Everyone Should Know about Wealth and Prosperity. New York: St.” (2016).
- Gwartney, James, Robert Lawson, and Seth Norton. Economic freedom of the world 2008 annual report. The Fraser Institute, 2008.
- Fernandez, Pablo. “Finance and Financial Economics: A Debate About Common Sense and Illogical Models.” (2017).
- Angelov, Pavel Angelov. “Private Property Rights As A First Essential Component of The Index of Economic Freedom.” Land Forces Academy Review 21.1 (2016): 58.