The Government Can Control the Economy

http://search.proquest.com/docview/507896696/139EBD69B4F5D04AF2B/2?accountid=6222

The government actually does have a lot of control over the economy but they need to be very careful with their intervention because things can go very wrong.  The article I will be referring to in this post gives some examples of times where governments have intervened with the economy and things have not turned out well.  The role of the government in the economy is very important not just for the government, but also for the businesses involved.  However, the argument is over the amount of influence the government should have. 

A completely free market or a laissez-faire economy means that the government has absolutely no control over the economy at all.  There has never been a completely laissez-faire economy simply because everyone knows that it would never work.  Basically, if companies were all allowed to control their competition and prices, the consumer wouldn't have a chance.  Companies would be able to take advantage of the now uninformed consumers so government regulation is clearly necessary.  So it's decided that at least some government regulation is necessary, but now the question is how much.  

This article talks a lot about Keynesian economics of which the basis is that the government needs to increase spending on public works such as building roads, schools, hospitals, etc. in order to decrease unemployment which would eventually increase the overall market activity.  The idea of this is to get people jobs with hopes that these people will add to the demand in the market and stimulate the economy.  It sounds easy enough, however, the tricky part is exactly how much to spend.  The article mentions some examples of some western economies that decided to put these Keynesian principles into action and ended up being horribly unsuccessful.  The mistake that these governments made was that they didn't give themselves any limits before hand on how much they were ultimately going to spend and they all ended up in economic depressions with an even larger gap between the rich and the poor.

I found this article on Proquest Platinum

Political Economy of Government Intervention in the Free Market System

Written by Stephen K. Aikins

The author is an assistant professor in the Department of Government and International Affairs at the University of Southern Florida so I would say he is pretty credible.  The author cites many different works in this article and the it was written in 2009 so it is still applicable.


Would a free market system actually work?