Government Involvement in the Economy

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A Double-edged Sword? Ask an average U. S. Citizen about their stance on government in the economy, and most will agree that government must play some role. The question is, where is the line drawn and at what cost? This cannot be answered without a comprehensive analysis of the political economy and history of economics in the United States. Since such a thorough analysis can not be done within this paper, the goal Is not to answer the question, but to provide Insight and understanding In the field of economics within our political system.

Government has always played a role in the economy (regulating commerce since the very beginning) but one cannot deny that it has played a more crucial role for the past century. Teddy Roosevelt understood that in order to appease the class antagonisms and stabilize the rapidly growing economy, slow reforms needed to be made? such as trust busting and increased regulation of business. During the depression, Franklin Roosevelt administration Intervened In such a way that provided relief from the economic woes of the times to millions of Americans.

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In the sass’s, the gold standard was replaced by the central banking yester, which would place more economic control in the government’s hands. Countless other examples can prove to anyone the magnitude of the intervention the economy. To gain a better and broader view of this issue, the difference between ‘Intervention’ and ‘Involvement’ must be understood. Intervention Is a short term solution to long term problems created by the Intrinsic contradictions and barriers within the capitalist economy? called the business cycle.

Involvement Includes long term goals achieved through the implementation of regulations and economic leslies that seek to solve many problems of the economy. In the current political sphere, government is the only marginally democratic way to ensure fairness and justice within the economy. What are the main aspects of the U. S. Economy, and in what way Is the government Involved? Contrary to popular belief, the united States Is a mixed economy. L Emphasis Is placed mainly on the private sector, which accounts for 61% of the U.

S. GAP. This gives the private sector a substantial power to shape the future of the economy. There are three main manifestations of government involvement in he economy: taxation, regulation, and expenditure. Taxation is the governments main ‘income’ source. This money is primarily for public sector use such as roads, schools, military, etc. , although from time to time It Is used to stimulate private sector growth during times of economic hardship. 2 Regulations are a major and Important part of government involvement.

These regulations are aimed at protecting the public and stabilizing the economy. Anti-monopoly laws seek to encourage competition, which is a vital aspect of capitalist economics. If monopolies materialize, arrests lose what ability they have to self-regulate. Expenditure is a major way that the United States is involved in the economy. The united States government funds schools, and welfare). The TARP program utilized billions of U. S. Tax payers dollars to stabilize the economy through the purchasing of troubled assets from the central financial institutions to stop them from falling apart. The governments biggest role Ninth the economy as a whole, is providing the means and structure for capital accumulation and flow within the country and around the world. Opening of new arrests is vital for economic growth, and more often than not requires the assistance of the state. Within our political economy, capitalists need places to move capital in order to invest in money making ventures. “Politicians and state bureaucrats typically seek to enhance the wealth and power of their state [economically and politically] both internally and externally.

To do so under contemporary conditions requires that they facilitate capital accumulation… Or find ways to extract profit from elsewhere. ” 4 This can be done a multitude of ways, the most historically significant being imperialism and trade agreements, which is exclusively a state power. In the following paragraph, a brief assessment of the TARP program and policies similar to t will provide meaning behind the “double-edged sword” of government intervention in the economy.

As explained in brief above, TARP (Troubled Asset Relief Program) was a program implemented during the Bush administration and carried out through the Obama administration. The goal was to strengthen the financial institutions by allowing the government to buy troubled assets and equities. In it’s simplest form, this is an outline used over and over again. Financial institutions and industries fail, leaving the burden on citizens. This notion dates to the 19th century, when Andrew Jackson stated that banks privative profits and socialize losses.

Many have called this ‘socialism for the rich, capitalism for the rest. ” What happened was the almost complete recovery of the financial institutions, leaving what former Secretary of the Treasury, Lawrence Summers, called the “human recession. ” Due to the economic crises caused by private institutions, the tentacles of the global finance system left all areas of industry and life untouched. Layoffs, Job losses, pay cuts, and austerity measures are all things directly related to the crash of the financial institutions. This is a concept at the core of capitalist economics? the business cycle.

Every crises of the current economic system, whether big or small, lays the burden on the backs of the eroding middle class and the lower-class. These crises are never solved, they are simply moved geographically and within the socio-economic classes. What can be done about this double-edged sword of government intervention? Can the problems ever be solved? Just by examining the history of economics, one can see clearly that the internal contradictions of our economy inherently presuppose the government interventions that take place periodically.

Our economy requires government intervention from time to time in order to allow itself to keep from crumbling. However, can government be involved and not Just intervene? Of course. The government can implement policies aimed at protecting the lower classes. Austerity measures do the opposite. To keep our society from collapsing, government must shift is emphasis to human needs, rather that economic reductionism. Many problems can be solved by cutting actual wasteful spending, not social programs that benefit the needy.

Though some reform has recently been spending. One study in the sass’s “expose[d] outrageously overpriced military spending on items such as a $7,600 coffee maker and a $436 hammer. ” 5 The government can do plenty to help appease economic trouble in the long run, much in part by reforms that would try to prevent crises, or prolong eras of economic growth. The main question is not whether government intervention relieves economic Ones, that is simply a fact. The question is whether this is moral to make the public sector pay for private sector losses.

Everyone must ask themselves this question. For the current time, intervention is a necessary evil within the organization of our economy. Though I personally disagree with intervention, I understand that without it the economy would be in ruins? leaving the working class in even worse conditions. En must begin a new and non-biased dialogue in this country that searches to solve these problems once and for all. We will never find true economic and social stability if we are too afraid to search for the answers.

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Government Involvement in the Economy. (2018, Jan 05). Retrieved from

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