A capitalist economy involves the private possession of businesses and assets. Countries that incorporate the idea of capitalism depend on the free market to determine incomes, prices, the distribution of goods and wealth. On the other hand, socialist economic structure involves greater government intervention in the process of resource allocation. The distribution of resources is usually carried out in an egalitarian way. Although the capitalist market system works best for some countries, it often creates inequality in some economic systems. In this case, Merced has been a victim of the capitalism. Merced which is a state located close to the rich state of California, surprisingly, has the highest rate of poverty and unemployment rate in the entire United States of America (Avalos 32). The town is popular for massive agricultural production that often yields a lot of profits to the farmers as well as the processing industries. The town is also known for the research university that often offers economic solutions during complex economic situations. Although the town has all the necessary tools that are essential for economic growth, it has remained behind, struggling to reduce the gap between the rich and the poor, the poverty levels as well as high unemployment rates (Molinar et al. 37). For Merced to realize economic growth and reduction in poverty levels and the unemployment rate, the implementation of capitalist and socialist policies are essential.
The city council of Merced should decide on regulating the largest corporate businesses. The regulation of business corporate often reduces monopoly and as a result, small corporate can thrive amidst the competition by the large corporate organizations. In Merced city, most of the organization is agriculturally based, by regulating the operation of the businesses, the small-scale farmers will be capable of having the market share of their small-scale products (Merced County 26). When the city council of Merced city decides to control the employment systems within the organizations, the skilled workers will be able to get opportunities, a situation that may cause a reduction in the unemployment rate. On the other hand, lowering the taxes on the wealthiest two percent may prove to be a solution to the increasing poverty levels. Most companies determine the market prices of their goods by using the taxation rate set by the government or the city council. When taxes are reduced, the prices of goods may go down, a scenario that will have significant impacts on the poverty levels. Additionally, when taxes are lowered, corporate businesses may decide to increase the salary scale or increase the number of workers, a situation that will aid in reducing the rate of unemployment within the city.
The regulation of corporate businesses should involve checking the levels of production as well as controlling the employee's welfare. In most business organizations, employees are treated unfairly due to lack of alternative employment opportunities. The intervention of city council of Merced will be able to improve the terms and conditions of work (Nguyen 8). The council will be able to determine the salary scale of the workers, a scenario that will reduce low incomes among the workers. For the Merced city to achieve the regulation of businesses and lowering of taxation among the wealthiest two percent, the combination of socialism and capitalism is essential. When an economy operates on both the principles of socialism and capitalism, it is a clear indication that there is an even ratio between the state's political and economic progress. When an economy is skewed towards the political development as in the case of Merced, the market becomes dominated by the powerful people in the society, resulting in the reduction of active operation of private sectors. On the other hand, when an economy is skewed towards capitalist's activities, or when an economy is dominated by the capitalists, the resulting economy would be completely subjugated by private interest. In the above case, the governing authorities may also be subdued by the capitalist who often has interest in the private sectors. The city of Merced has for a long time been influenced by the capitalist activities that have influenced the private sectors thereby denying the government opportunity to create employment for the jobless citizens. In Merced County, the wealthy people constitute two percent of the population (Crenshaw 19). Most of the people cannot find opportunities to do businesses as a result of monopoly. Additionally, the entire United States economy also suffers from capitalist activities; the high unemployment rate is usually caused by the government inability to control the private sector.
The mix of capitalism and socialism will be capable of creating a balanced ratio in both the Merced and the United States economies. When the government is prepared enough to control the private sector, and when the private sector is more advanced to control the government, an economy will realize equal growth, a scenario that will ensure a reduction in unemployment and poverty rates. In the above case, neither the government nor the capitalists will have the influence over economic resources.
Avalos, Antonio. "Migration, unemployment, and wages: The case of the California San Joaquin Valley." Contemporary Economic Policy 28.1 (2010): 123-135.
County, Merced. "2030 Merced County General Plan Update." Revised Draft Background Report, Section 10 (2012): 10-1.
Crenshaw, Adam L. "California Economic Development Report A Shift from Industrial Plants to Kindergartens in Merced County, California." (2010).
Molinar, Richard, and Maxwell Norton. "Hoplia-a new pest in strawberries." (2012).
Nguyen, Loc H. "The relationship between unemployment and child maltreatment: A county-level perspective in California." Children and youth services review 35.9 (2013): 1543-1555.
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