Appropriate Role of Government Intervention Liberty University

7/29/2019 Appropriate Role of Government Intervention Liberty University

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Appropriate Role of Government Intervention

Liberty University

1. What should be the role of government be during difficult economic situation?The government role is to stabilize the economy, control inflation, combating the

recession, limiting spending, budget, provide public goods and services, resisting tax cuts and

reining in growth in the money supply. In addition, deal with externalities, fostering

economic efficiency, regulation, tax rates (fiscal policy) and monetary policy.

According to Barr (p. 98), state intervention should be for reason of efficiency described in

four ways:

Regulation - quantity of supply (e.g. hygiene laws relating to food- buildingstandards).

Finance - involve subsidies (taxes). (e.g. local-authority housing) Public production- covers defence, education and in some countries health care. Income transfersenable recipients to buy goods of their choice at market prices.

(For example, receive retirement pension).

The governments role includes the creation of jobs; not only government jobs but

private sector and non-profit jobs. For example, jobs creation through contracts such as

infrastructure, roads, grants and administrative/office positions.

2. Should government intervene in market failures? Argue for or against and use thecurrent economic crisis to explain your argument.

I am in the middle between yes and no to government intervention in market failures.

The way the electoral process is to vote politicians into office for the best interest of the


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voters. Their main duty is to represent the voters by legislating laws, maintaining order and

to ensure growth in economy. Without government intervention, disorder and lack of

economic growth could cause social unrest, political disorder and the American people will

not be able to defend itself from attacks or invasion.

The American current economic crisis is jobs, unemployment, housing market and

healthcare, etc., I personal believe it is the job of the government to maintain order and

ensure growth in the economy. For example, the U.S. government regulates certain activities

in the market such as the antitrust suits to limit monopolistic business practices. This would

limit distorted workings of the market and fairness with all the competitors.

Government intervention can affect the economy for example, the public government

agencies wasteful spending practices, bureaucracy and unfair regulatory practices. Public

agencies may be run partly for the benefit of bureaucrats who run them (Barr, p.89). For

example, the Department of Education agency inefficiencies the implementation and

management of the Federal Direct Loan program that may be creating headaches for students

and putting borrowers credit at risk. In 2010, Democrats approved a federal takeover of the

student loan industry and now the federal government oversees every single new higher

education loan in the country. After the Occupy on Wall Street protestors believe the

government fail to monitor the public agencies actions and unmet needs that benefit the

bureaucracy, powerful interest groups (banks) and the government is ran by the Capitalist

(wealthy).

3. Do you believe that definition of poverty and inequality can only be determinedbased on value judgments? Discuss and provide evidence and substantiate your

response with appropriate references.


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Discussing inequality and poverty will involve value judgment. From the readings, in a

market economy an individuals ability to consume goods and services depends upon his/her

income. What is an unacceptable distribution of income and what the government should

do about this is value judgment is a political issue. Therefore, policy makers may select

measures of poverty and inequality that are consistent with their values and objectives

making an explicit value judgment - implicit in measures. Models use to measure poverty

and inequality- is absolute poverty, income poverty, and inequality refers to a standard of

living below some benchmark (Barr, p. 130). Relative poverty implies that a person is poor if

her standard of living deviates substantially from the average of the society in which she

lives - i.e. if she cannot participate in normal life (Barr, p.130). Income individual full

income which consist of money, income and non-money income (e.g. job satisfaction,

production, enjoyment of leisure) (Barr, p. 150). Inequality is the difference between income

groups (Barr, p.130).


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References

Barr, N. (2004).Economics of the Welfare State. (4th

ed). New York, NY: Oxford University

Press.

Galbraith, J. (1969) The Affluent Society.(2nd

Ed.) Retrieved. March 24, 2012. From

http://abridge.me.uk/doku.php?id=the_affluent_society
http://abridge.me.uk/doku.php?id=the_affluent_societyhttp://abridge.me.uk/doku.php?id=the_affluent_societyhttp://abridge.me.uk/doku.php?id=the_affluent_society


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Appropriate Role of the Government

Liberty University

Assignment Public Policy

In response to the author Ryan Stanley post, it is interesting how he explains his thoughts

regarding to the governments role that it should be consumptions soothing. To define

consumption smoothing and how it relates to the government extending the unemployment

benefits is to reduce the affects of consumption or the unemployment would escalate. My beliefs

is that the government should play an active role in the economy however reform some

regulations, improving their roles in redistribution of economic power and modify structural

changes to protect public interest. Some believe that privatization is emerging while the public

sector is decreasing however no one believes in not having a government but a better

government with sound regulations. But matters become considerably more complicated when

regulation is included; it is then necessary to distinguish not only the sector in which (a)

production and (b) finance take place, but also who decides (c) how much in total of any good

will be produced and (d) how much each individual consumer receives (Burr p.101). The public

sector possesses structural disadvantages that makes disruptive innovation more difficult ( D.

Eggers & R. Gonzalez, 2012). The public sector can shape the markets in which it operates by

taking cues from the private sector. For example, Wal-Mart used enormous buying power to

shape the entry of products into new markets and this drives down the cost of goods sold. The

public sectorcan learn from the private sector creating a public sector markets to support low-

cost and disruptive innovations. Public sector using privatization tools can improve education,

defense and health care; all across the public service departments.


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References:

Eggers, William & Gonzalez, Ruben (2012). Disrupting Public Sector. Harvard Business

Review. Retrieved 3/27/2012 from http:blogs.hbr.org/cs/2012

Barr, N. (2004) Economic of the welfare state. (4 th Ed). Oxford University Press. New York, NY

Appropriate Role of the Government

Response to the author Joel Heiser who hit on some great points regarding to

governments intervention. He explains how the intervention is needed only on certain conditions

when the market fails. Market failures can be corrected by regulations when there are external

issues. The question is when the government intervenes is there too many regulations? These

regulations, I believe if there is not enough flexibility; to little or too much following rules or

laws the government role will not be effective. The government will be effective, if it doesnt

improve or reshape itself to handle a unique problem. Someone should have regulated the

capitalist of Wall Street to keep them in line. Every time there was a crisis of capitalism the

government economic role swells. My opinion, over the years, it has been proven that the

government screws up the economy effectively than the free markets. The free market seems to

bounce back in shape without the governments intervention.

The Christian worldview perspective shapes how the governments role suppose to be

based according to the political principles The belief that governments were instituted by God

and for the benefit of man and that he holds men accountable for their actions in relation to

them, both in making laws and administering them, for the good andsafety of society (E.

Benson, 1968).


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References:

Barr, N. (2004) Economic of the welfare state. (4 th Ed). New York, NY:

Oxford University Press.

Benson, E. (1968). The Proper Role of Government. Retrieved March 28, 2012. From

http:www.zionbest.com/proper_role.html

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Appropriate Role of Government Intervention Liberty University