Government Intervention in the Free Market Essay

The United States is known for having a free-enterprise economy where a business can be conducted freely without government involved. In free-enterprise economies, goods and services are traded openly and are produced depending on the demand. People who support this type of economy believe it motivates businesses to make money and welcome new ideas. An important part of the economy is to have full employment and low inflation.

Free-market and Command economy are the two-major economy system. It has sparked years of controversies among individuals over which system is better. However, no agreement has been reached. Meanwhile, it is obvious that free-market economy predominates all around the world as the majority of countries are following an economy which free-market process the dominating position.

What are the main reasons why government should take only a limited role in a market economy?

Government plays a crucial role in the market economy by ensuring the laws and regulation are abide by, and control the production of the private sectors, although, over the years its efforts in controlling such economies are minimal and insignificant. Market forces of demand and supply play a major role in setting trends that such market economies follow. Economic growth, inflation, interest rates, wage rates of workers and unemployment rates are some of the fields the government takes part in controlling, to boost the Gross National Product (GNP) of the state.

Free markets are considered inequitable because of the lack of equality; if the government were to intervene they would promote equity. The Brazilian government could stabilise the economy and lower inflation and promote economic growth (Coglan, 2013, pg312).

During election time, government officials are always talking about how they are going to help the economic growth of the society. They claim that they will decrease taxes, lower interest rates and make things more affordable by putting more money into the hands of the consumers, or the American public. But, at what price should we allow the government to regulate economic activity in society? Is regulation beneficial or detrimental to the well being of our economic markets? Throughout history, economic markets that are allowed to operate freely from government controls will eventually balance out and lead the economy in the right direction. Case in point, during the term of Alexander Hamilton, the government fixed the gold and silver ratio

Thanks for your comment and point of view. What I was referring to was that the government may desire to regulate monopolies by granting patent to new invention or prosecute antitrust cases so as to protect the interests of the consumers. For example, monopolies have the market power to set prices above in competitive markets. The government can control monopolies through price capping, promote competition and preventing the growth of monopoly

It is the high time we said farewell to neoclassical, laissez-faire approach of looking at the economy because it does not seem to be working fairly. Government intervention - and above all, regulation - is crucial in stopping the vicious cycle of inequality that has been spinning since the II World War. Introducing a worldwide 2% tax on wealth, as well as finally fixing the tax avoidance and monopoly power abuse problems prevalent all around the world, proposed by Piketty may seem a great solution for income redistribution, but we also need something less utopian. And it is not true, as some neoclassical suppose, that regulation destroys decent businesses. People from the Right still argue that regulation implies government’s superfluous interference with the market. But they are wrong. Because yes, it is true that anti-pollution regulation is bad for polluting businesses. And yes, it is true that banning predatory lending is bad for loan sharks. And then there is another true fact - sound regulation doesn’t affect sound

Government interventions is an economic intervention by the government or international institution in a market economy to help impact the economy past basic regulation of fraud and enforcement of contracts. Government regulations are split into two categories, social regulation and economic regulation. Economic regulations obtain to mainly control prices. This was intended to protect consumers and certain companies from more powerful companies. Social regulations obtain to promote objectives that are not economic, such as safe workplaces and a cleaner environment. My Government Interventions are the First Income tax, The Interstate Commerce Act, and The Sherman Antitrust Act. I will evaluate these interventions by describing what it was, what the purpose of the act was, the primary and secondary costs and benefits of the intervention, and if the intervention was economically efficient.

Of course there are many factors that take into place for those who want to get rich. In a free market if someone wants to get rich, they can create an improvement in technology which can essentially bring more for less to a company. The way this works is for instance if someone comes up

The government plays a critical role in a market economy, for it establishes the strategies of providing key services, redistribution, regulation and subdivision. Concerning provision, the government plays the role of providing public goods and services such as national security, which is imperative for a stable economy. Within the American economy for example, the Lorenz curve provided information towards the existence of unequal distribution of income. By carrying out redistribution therefore, the government will be making distribution of income and other important resources less unequal (Gregory et al, 2004). By carrying out regulation within a market economy, the government will be setting grounds for a free and fair market, which is the foundation upon which a stable economy operates. Over and above, I harbor the perception that the government should intervene in a market economic system, for such a strategy guarantees that, the ideal monetary and fiscal policies are in place to prevent the market from fluctuations.

Government intervention could be viewed as an essential element to regulate the economy, but over the past decades, we have seen that it is not the case. Adam Smith a classical liberal proposed the idea of Laissez Faire, which

Why does the government feel the need to intervene in the market place especially when the economy is always so hard to predict? The government intervenes within the market place because they believe they know what is best for our economy. They attempt to address what is inefficient within the market place in order to create a more efficient economy. There are many scenarios of government intervention within the market place. Three great examples of when the government intervened within the market place was the first income tax and Internal Revenue Act in 1862, the Specie Resumption Act during the Panic of 1873, and the Chinese Exclusion Act of 1882.

If the government is to be involved in the marketplace, it should no longer have the ability to control what individuals do with their money. The government’s involvement with the market place should be kept to a minimal because it focuses on one part of the economy rather than the economy as a whole, starting from mortgages and ending with living standards. Meaning it focuses on the wealthy and not the

In a free market, industry is free of government intervention and regulation. Businesses therefore have the liberty to allocate resources how they wish, and to set prices at a level preferable to them individually – so long as these prices remain realistic and competitive. They logically vary depending on the economic climate in which the business operates. In some cases businesses take advantage of the seemingly boundless market in which they operate, and as a result price fixing may occur. In such a case, intervention is acceptable as an exception to the free market concept.