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differences between central planning and free markets

Twin brother, Tom and Bill, constantly fight over toys. For instance, Tom will argue it is his turn to play with a toy, while Bill argues it is his turn. Their parents frequently have to intervene in these disputes. Their mom has conceived an idea that might reduce these conflicts. In particular, every toy in the house would be "owned" by one of the boys. The owner would have complete authority over the use of the toy. The mom reasons that ownership would cut down on disputes. Any time there is an argument over a toy, the owner gets the final and immediate say. The boys' dad is concerned that this idea will prevent the boys from learning to "share." He envisions that under the new system, Tom will not allow Bill to play with his toys and Bill will not allow Tom to play with his toys. The old system forces them to figure out a way to share the toys.

Do you think that their dad's concerns are valid? Explain.

Solution Preview

This is a very over-simplified example to discuss the differences between central planning and free markets (especially for one credit). Mother is an example of extreme (rapacious) free markets where the game is to accumulate as many toys as possible as a kind of zero-sum game with the other players in the market. At the end of the game, very successful players like Carnegie may or may ...

Solution Summary

The differences between central planning and free markets are highlighted.

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