Impact of Economic Rationalism to Consumers - Coursework Example

Economic rationalism Student’s Name: Instructor’s Name: Course Code: Date of Submission: Introduction Due to changing economic environment, many of the organizations are considering the best ways they can improve their competitive advantage. There are changes in the business environments which have impacted the operations of many organizations. In Australia, the economic rationalism has had various impacts to consumers, the government and the organizations. Moreover, the economic rationalism has made the consumers to be better off than before its development. Economic rationalism is the market conditions that can improve the operations of various economies than the laws which are set by the government (Gregory 2014). Economic nationalism has impacted on the performance of many organizations because deregulated capitalist economy tends to provide a clear understanding of the market equilibrium than the laws and regulations which are formulated. In this effect, this essay will discuss the effects of economic rationalism in Australia. Impact of economic rationalism to consumers In the first place, the economic rationalism in Australia has made the consumers better off because of the practices it has led in the market. For instance, due to globalization, the economic rationalism has led to the development of conventional practices which have led to market liberalism. The market liberalism has promoted the way business operations are conducted. This is because the market conditions are determined by market forces and not the laws which are established (Sheil 2000). This is important because the consumers cannot be exploited since the market practices such as pricing are determined by the demand and supply and not the laws which are determined by the Australian government. However, the market forces can sometimes lead to customer exploitation if monopolistic practices are experienced in a particular industry. In this effect, it is argued that economic rationalism has left the customers better off. In addition, the economic rationalism has led to implementation of its policies which have left the customers better off. Due to economic rationalism, there are various institutions which have been developed with the aim of improving the values and ethics of doing business. This is done with the aim of improving competitive practices that help to stabilize the business operations which in turn affect the consumers positively. For instance, the National Competition Policy was developed by the Australian Government in the year 1995 (Fenna &Tapper 2012). The aim of these policies is to ensure that the barriers to competition are eliminated so that there is free entry to the industry encouraging fair competition, which is important in ensuring that the customers benefit from the ethical practices. The aim is to ensure that monopolistic practices are not experienced in the industries as this can lead to consumer exploitation since there will be few suppliers in the market who have strong bargaining power than the consumers (Fenna &Tapper 2012). There is no organization that will be driven out of the market due to competition, hence encouraging fair competition to benefit the customers through effective pricing hence economic rationalism has left the customers better off. Furthermore, the government of Australia and the business organizations are able to pursue the flexible labor market conditions. There are institutions which were developed to ensure good working relationships (Sheil 2000). For instance, there was an Australian Industrial Relations Commission which was developed with the aim of improving the working relationship between the employees and the employer. The commission helped to ensure collective bargaining in terms of the working conditions and employee compensation. When there is a good working relationship, the main beneficiaries of the relationship include the consumers. The employees are committed to engage in ethical practices when they have a good working relationship with the employer leading to better quality products and services to meet the needs and expectations of the customers. This is important since it helps to improve the satisfaction of the customers (Makin 2013). Motivated customers will be committed to their tasks and this will help to meet the needs of the customers, hence economic rationalism has made the consumers better off. In addition, economic rationalism has led to privatization of many corporations which were initially owned by the government. This is because the public sector corporations have declined steadily implying that most of the organizations are now privatized. This was done with the aim of improving the quality of essential products and services to the customers (Reserve Bank of Australia 1997). This is one of the strategies which are employed to improve the competitive advantage of the organizations which benefit the consumers through quality products and services. Private corporations provide quality products and services due to competition unlike the government corporations which in most cases are faced with poor management strategies. In this effect, the economic rationalism has made the customers better off (McLean 2012). However, there are those who argue that economic rationalism has led to privatization which means that the essential services which are provided to the consumers are costly as compared to when the products and services are provided by the government owned corporations. This hinders some consumers from accessing essential products and services if they don’t have financial stability to buy them. Economic rationalism in Australia has led to deregulation of the financial markets and this has promoted the development of new markets and the ways in which economic performance is reported. Deregulating the financial market has led to improvements in the performance of the organizations as well as the consumers who can access the financial markets (John 1997). For instance, banking system has been made it easier and the consumers can make their payments electronically. This was because there was no strict regulation of the financial markets, hence the banking industry attracted many investors leading to the development of electronic business transactions. This means that even the consumers can access the facilities in the financial markets like the loans and the payment can be made electronically. This is important since it has helped to improve the transactions which are conducted by the consumers, thus improving the satisfaction of the consumers. Moreover, the free market conditions help to regulate the taxation rates which influence the interest rates (Self 2000). This is important since it enabled the consumers to access the credit facilities easily to make their purchases. In this effect, it has been determined that economic rationalism has made the customers better off. However, it has been argued that failing to deregulation of financial markets can lead to global financial crisis like the one which hit the globe in the year 2007 and 2008. This affected the operations of many economies which destabilized the consumers, hence effective policies should be developed to ensure the financial markets operate efficiently. However, there are those who argue that economic rationalism has left the customer worse off. In the first place, they argue that economic rationalism has led to increase inequality, especially in terms of income (Geoffrey 2014). The inequality in terms of income was especially experienced because of the tighter targeting and the improvements which are made according to the design of products and services through social welfare programs. The tax can be increased on the products and services because the tax imposed by the government is shifted to the consumers who carry the burden of paying for the taxes. When the products and services are provided by the government corporations, subsidization is guaranteed and this lowers the cost of the products and services (Geoffrey 2014). This promotes inequality for the consumers since the rich will continue to be rich while the poor will continue to be poor. In addition, economic rationalism has promoted financial constraints among the consumers since the market forces can lead to increase in prices because the prices are determined by the demand and supply (Beder 2006). This affects the access to essential products and services to the consumers because there are no laws which fix the price ceiling and price floors and in the process the consumers can be exploited by the prices of the products and services. Conclusion Economic rationalism is the concept of deregulating and ensuring free markets as well as applying privatization practices. From these findings, it can be concluded that economic rationalism has helped the customers to be better off. This is because through economic rationalism the market conditions such as monopolistic have been eliminated; free entry to the industry and this promotes fair competition, which benefits the consumers and has helped the consumers to access the financial market facilities. However, there are those who argue that economic rationalism can lead to consumer exploitation due to lack of proper regulation policies. References Beder, S. (2006). Free Market Missionaries: The Corporate Manipulation of Community Values. London: Earthscan. Fenna, A &Tapper, A. (2012). The Australian welfare state and the neoliberalism thesis. Australian Journal of Political Science, Vol. 47, No. 2, pp. 155–72. Geoffrey, S. (2014). The rise and fall of economic rationalism, ANU Press. Gregory, W. (2014). What is economic rationalism? Retrieved on 26th April 2015 from http://www.abc.net.au/money/currency/features/feat11.htm John, Q. (1997). Professor of Economics, James Cook University, 'Economic rationalism', Crossings, Vol. 2, No. 1, pp. 3-12. Makin, T. (2013). Economic irrationalism has guided policies of the il-literati. Sydney, Australian. McLean, I. (2012). Why Australia prospered: The shifting sources of economic growth. Princeton: Princeton University Press. Reserve Bank of Australia. (1997). Privatization in Australia. Reserve Bank of Australia Bulletin. Self, P. (2000). Rolling Back the Market: Economic Dogma and Political Choice. London: Macmillan Press. Sheil, C. (2000). Water's Fall: Running the Risks with Economic Rationalism. Annandale, NSW: Pluto Press. Read More