Free Paper Sample about Government Intervention in Economic Development

Published: 2022-04-27 05:50:19
Free Paper Sample about Government Intervention in Economic Development
Type of paper:  Research paper
Categories: Economics Government
Pages: 4
Wordcount: 877 words
8 min read
143 views

Governments often intervene to attend to inefficiency issues in a specific economy. Within an efficient market environment, the available resources are distributed to those that need them in the quantities that they need them. For the inefficient markets, this is often not the case as some have too much resources while others have insufficient to support the economy. The element of inefficiency can take different forms. For this reason, the government often tries to combat the inequities through the formulation of policies, regulations, and subsidies. The scarce resources can be allowed through the pricing approach whereby the preferences and spending decisions made by the consumer and the supply decisions of business ventures are integrated to reach an equilibrium price. This is effective in a free market. Subsequently, when the demand increases, the potential profit from supplies to the market increases and this leads to an expansion in supply with the aim of meeting the rising demand from the consumers. Nevertheless, governments may decide to intervene in the economy to influence the distribution of limited resources among users, but there will be documents that support and oppose the interventions. The documents, however, focus on the achievement of equitable allocation of resources, improvement of economic performance and rectification of market failure.

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Henry Ford in his article opposed the government intervention used on unemployment with an idea he calls "self-help." He failed to believe that people need to seek support from the governments continuously. He had a belief that the reliance on the government for help will limit people's lives towards achieving personal success. To achieve financial security, there is a need to focus not only on industry but also on agricultural activities and achieve sustainable support. In case there is limited capital to get started in farming, cooperation with other farmers can be a viable strategy. He concluded that there is an assurance in farming since unemployment is everywhere and agriculture offers a viable method of stability for families across the globe. President Franklin Roosevelt in his inaugural speech rebuked the psychological paralysis that was created through government interventions to bring economic stability. According to him, there is nothing to fear except the fear itself. Subsequently, he pointed to the need for broad executive powers to be aimed at addressing the economic issues rather than focusing on wars. This meant that there was nothing new about the suggestion that the Great Depression was majorly a psychological issue and the government needs to focus on economic problems. Through the concept of war, Franklin Roosevelt showed that through activist administration, discipline was imposed upon a nation.

Two documents that support government intervention for economy includes the New Nationalism Speech by Theodore Roosevelt and Clayton Antitrust Act of 1914. Roosevelt undertook a speechmaking expedition to call for reform in every aspect of American life with the notable exception of race relations. This idea needed an absolute involvement by the national government in various sectors of the American life and ultimately influence the economic development. According to his, the nation needed to change and this required for the involvement of the federal government. The primary concept here was the matter linked to income inequality among the rich and the poor and form this point of view; few men had considerable wealth while a significant number of others struggled to make ends meet. This was the primary theme of the speech where he concluded up as "the essence of the struggle is to make opportunities available for all, destroy privilege and offer each person a possible value both to the Commonwealth and to himself." He advocated for the reform on how the business ventures and the corporations operated. He believed that there is a need for labor and business to coordinate towards the well-being of the people rather than the wealth of a few men in the society.

The Clayton Anti-Trust Act, 1914 is another document that supported the interventions on the economy. This document extended the role of the government in regulating business ventures and facilitated the created the foundation for the most business regulation we have today. It elucidated the regulations revolving around anti-trust, offering "fair warning" on the risks of anti-competitive business customs. This Act specified behaviors that cannot be protected under the law, and this created a trading discipline among the entrepreneurs for sustainable growth and development. From the economic perspective, monopolies are dangerous to the public, only in a limited range of markets such as law enforcement.

In a nutshell, many have alluded that governments play a negative role in economic development. Some of the activities associated with these include taxing policies, implementation of aggravating regulations or spending inefficiencies. Nevertheless, the government has negative and positive effects in equal measures since, without the government interventions put in place, the contemporary markets currently seen would never have materialized.

Bibliography

Barber, William J. Designs within disorder: Franklin D. Roosevelt, the economists, and the shaping of American economic policy, 1933-1945. Cambridge University Press, 2006.

Foner, Eric, ed. The new American history. Vol. 79. Temple University Press, 1997.

Letwin, William. Law and economic policy in America: The evolution of the Sherman Antitrust Act. University of Chicago Press, 1981.

Roosevelt, Theodore. "New Nationalism Speech." Teaching American History. http://teachingamericanhistory. org/library/document/new-nationalism-speech/(accessed June 8, 2013) (1910).

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