The Instigator
CMcCaddenNHS
Con (against)
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The Contender
drhead
Pro (for)
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Economic Governmental Intervention

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Voting Style: Open Point System: 7 Point
Started: 10/7/2013 Category: Economics
Updated: 3 years ago Status: Post Voting Period
Viewed: 631 times Debate No: 38601
Debate Rounds (5)
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CMcCaddenNHS

Con

America was founded upon the economic beliefs of Adam Smith as published in his seminal book The Wealth of Nations in 1776. Smith proposed that a free market economy in which governmental intervention is minimum yields the most economic prosperity. Smith argued, and history has proven, that a market economy in which individuals with specialized skills pursue their own interests makes for the most economic success. An environment that promotes economic freedom is imperative to economic growth. Economic freedom consists of: stable currency, private property protection, low taxes, low tariffs, and minimal governmental intervention. Economies that possess these characteristics are the most conductive to growth.
History has overwhelmingly shown that capitalism has prevailed over socialism, and thus governmental non-intervention and the market economy have prevailed over governmental intervention and the centrally-planned economy. After World War II, North Korea adopted a socialistic economic system while South Korea adopted the market economy. Today, North Korea is one of the poorest and most oppressive nations on the planet while South Korea has one of the fastest-growing economies on the planet. Similarly, After WWII, Germany divided, and East Germany utilized a centrally-planned economy while West Germany utilized a market economy. East Germany eventually surrendered to West Germany because of the severe poverty it encountered. The results of the Cold War also support the supremacy of the market economy; during the mid-twentieth century, the world"s leading scholars and economists were divided between those who advocated for socialism and those who advocated for capitalism. The Soviet Union"s governmental intervention was an utter failure, and the nation collapsed in 1991; America, of course, has not and will not collapse because of the ideals it was founded upon, one of these being the concept of Smithian economics. The competitive market economy has proven superior to the centrally-planned economy, but governmental intervention is arguably necessary in many cases (and governmental intervention is not necessarily synonymous with socialism).

Sources:
B. Taylor. "Socialism vs. Capitalism." 2006. 7 October 2013. Web.
.
Holcombe, Randall G. Economic Freedom and Economic Growth. The Independent Institute. 1
February 1998. Web. 28 September 2013.
drhead

Pro

Thank you for the opportunity to participate in this debate. I will be arguing in favor of a mixed economy, in other words, one where the government does hold some power to regulate the economy although there is a generally free market where people are allowed to pursue their own career. I will also argue that some sectors of the economy are less well served by the free market.

America has always been a mixed economy under its current Constitution, as it is clearly within Congress's enumerated powers to regulate interstate commerce. The extent of regulation has varied over the years, and has arguably seen an increase over the years. It is not necessarily a free market in the sense that many libertarians might consider, although the enumerated powers of Congress may certainly be unused in order to do so.

Regulation is necessary in a variety of cases. The most notable of these would be matters of public safety. I think we can all agree that we are better off as a society if our food is required to not contain anything that is known to be unsafe for human consumption. Now, what would happen if we allowed the free market to take care of things for us? Let's look at a hypothetical scenario: Let's say that ABC Company is selling XYZ product in two countries: one that has firm public safety regulations, and one that might as well be anarcho-capitalist when it comes to regulations. XYZ product contains a high amount of lead, which is known to be fairly harmful with regular exposure. In a country with firm public safety regulations, the lead would be discovered much quicker due to health inspections, and the company would most certainly be held liable for their actions and would probably lose a big chunk of, if not most or all profit gained from selling dangerous products. However, with less regulations, it is unlikely that the company would be held liable unless intent could be proven (good luck with that). The flaw would go unnoticed for a longer period of time unless there were extremely active private testing agencies. In addition, the company would most likely get to keep any profits gained from their questionable venture. This begs the question: why would we support a system which rewards or does not punish companies for deceiving the public? Clearly a mixed economy wins here.

In addition, there are some sectors of the economy which are better off as public works. Some have proposed that roads should be privatized. However, this isn't practical when you consider the fact that private roads would lead to one of two scenarios:

a) One company owns all of the roads in one area, giving them a monopoly. People have to use the roads whether they are kept up well or not, whether they are free to use or charge you by the mile, whether the intersections were designed well or could have been designed better by a two-year-old.

b) There are two or more sets of roads, built by two or more different companies which each have roadways set up where people can get from one place to another using only that company's roads. There are twice as many roads as are necessary.

People wanting to privatize roads cite accountability as a main reason, though in this case, we are given a choice between lack of accountability and lack of intelligence, and government owned roads end up having accountability. Don't like how your roads are run? Tell your governor. Don't like your governor's response? Vote for a different one next time.

Other forms of infrastructure face similar problems. Take ISPs, for example. Most Americans have a choice of two ISPs, usually the first cable provider to develop their area and the first phone provider to develop their area. Noting this, we immediately see a problem - wouldn't we normally expect the free market to provide consumers with multiple choices for their phone or cable provider? It turns out that new businesses are often unwilling to create new service options for customers already served by another provider due to the rate of return on investment being too low, especially in rural areas with lower population density. The rate of return on investment tends to be low for three reasons: one would be the high capital costs associated with laying all of the cable needed for a new network, another would be the fact that they would actually have to compete, and another would be the fact that having a customer switch often requires the customer to pay line installation fees, buy a new modem, as well as other inconveniences - in short, it isn't as easy as buying a new brand of cereal. This is why it is unlikely that we will see any new services like Verizon FiOS or Google Fiber in rural areas any time soon - it would be expensive and not very profitable to set up a new one.

Now, with that rant out of the way, how would a state-run alternative be better? The free market derives its accountability from the premise that consumers will always have another choice if their current one is bad. Theory is almost invariably different from reality, which shows that this is not always the case. As an example of a government-owned service, look at your water company - odds are, it's city-owned unless you drink well water. If there was suddenly poison in the water provided by your city, do you think that this incident would go by without someone losing their job? Government-owned services can provide accountability without a need for having two separate services, since we can vote to switch out the people responsible for managing them.

I'll end this round by saying that what I propose is not government ownership of all services, but that we consider which is best for each situation. Some sectors of the economy simply don't lend themselves well to competition, and in those cases it wouldn't kill us to use something more appropriate instead.
Debate Round No. 1
CMcCaddenNHS

Con

CMcCaddenNHS forfeited this round.
Debate Round No. 2
CMcCaddenNHS

Con

Hello,
This was meant for a school assignment. I'm going to have to close this somehow - this was crate so that I could debate another student from my school.
drhead

Pro

Oh. Well, just keep posting arguments and it'll run out of rounds. Challenge your friend directly next time and you won't have to worry about this.
Debate Round No. 3
CMcCaddenNHS

Con

So the rounds have to play out in order for the debate to end?
Debate Round No. 4
CMcCaddenNHS

Con

CMcCaddenNHS forfeited this round.
drhead

Pro

something
Debate Round No. 5
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