Download Summary on 千規律，萬規律，經濟規律僅一條

Summary on 千規律，萬規律，經濟規律僅一條
In this chapter, N.S. Cheung point out that under any economic system, there is only
one rule to determine the wealth of a person. No matter planned economy, capitalist
economy or even mixed economy, the rule is the same, which is only maximizer will
survive, those who do not behave as maximizer will be eliminated.
He further elaborates he point by saying in any kind of society, people compete for
scarce resources and rules are required to determine who win and who lose. Those
rules are said to property rights. Under the rules of property rights, there would not
have any economic waste to the society, which a loss in the potential income that no
one claims would not be found. Since resources are allocated to the highest-valued
use, the economy will become prosperous.
He use an example in USA to illustrate under government intervention, people have to
adopt non-price competition to determine who win and who lose. In the process of
non-price competition, there is rent dissipation, leading to a loss in potential income
which no one claims, which is an economic waste to the society. Therefore, by only
using price-competition to allocate resources can prevent economic waste. One
essential requirement for price competition is that Private Property Rights exist,
because if private property rights are not well-defined, people with great influence to
the society can get all the resources.
To apply Cheung’s statement, we can use the example of public swimming pool in
Hong Kong. During Beijing Olympics in 2008, the Hong Kong government adopts
the policy of free of charge of using any public recreational facilities. A quota is set
for the number of entrance every day for the public swimming pool. As result, long
queues are found outside the entrance of the public swimming pool. Those who have
more time to queue are more likely to enter the swimming pool free of charge, and
non-price competition is adopted. However, time is wasted during the queuing.
There is a loss in potential income because nothing has been produced to the society.
Hence economic waste is created.
After the Olympics ended, the Hong Kong government ended the free of charge
policy. All people using the public recreational facilities must pay a fee to use them.
Therefore, people need to pay for the use of the public swimming pool, and those who
have the ability and are willing to pay the price can use it, so price competition is
adopted and the swimming pool is allocated to the highest-valued users. No economic
waste is produced and equilibrium is attained.