Governmental Economic Intervention
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Debate intended for Dan Bousquet. Please do not respond unless you are him.
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. 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).
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
Bartlett, Bruce. "Bush Tax Cuts Had Little Positive Impact on Economy | The Fiscal Times." The Fiscal Times. N.p., 17 Sept. 2010. Web. 17 Oct. 2013.
English, John. "Job Loss Due to President Bush's Trade Policy." Epipolicycenter.org. N.p., n.d. Web. 17 Oct. 2013.
President Bush"s tax cuts accounted for an extremely minute increase in the federal deficit during his two presidential terms. Rather, President Bush"s reckless federal military spending accounted for the majority of the stifling increase in the deficit. President Bush"s funding of two wars, one of which " Iraq " was an utter calamity, accounted for the vast majority of the increased federal deficit. Interestingly, however, "the national debt has risen more during President Obama"s three years and two months in office than it did during the 8 years of the George W. Bush presidency." (Knoller).
Major L. Clark, III and Saade, Radwan N. The Role of Small Business in Economic Development
of the United States. U.S. Small Business Administration. September 2010. Web. 3
October 2013 .
Knoller, Mark. "National Debt has Increased more under Obama than under Bush." CBS News. 19 March
2012. Web. 17 October 2013 .
dbousquetnhs forfeited this round.
It has always been the government"s role to establish an environment of economic freedom by ensuring property rights, a stable currency, and free enterprise. The latter includes market regulations and consumer protection; with the industrial revolution came vast growth but also the need for regulation. Additionally, with the Great Depression came the Keynesian approach of governmental stimulation during times of recession. Milton Friedman also argued for governmental regulation during "boom times" of vast growth in order to minimize the fluctuation of the business cycle. (Krugman). In short, the role of the government in the economy is imperative; the government should utilize fiscal and monetary policy in order to maximize relative growth and minimize market fluctuations. However, this merely requires action on the part of the Federal Reserve and the executive governmental branch. It requires intelligent and responsible intervention for the sake of growth rather than irresponsible intervention for the sake of principle.
Now that the necessity of governmental intervention has been established, the implications of it will be discussed. The only efficient and beneficial governmental intervention is that which is necessary in order to uphold the free market. Even Karl Marx warned of haphazard intervention, "crack-brained meddling by authorities [can] aggravate an exciting crisis." (Sowell, Thomas). The market economy is the supreme economic force that allows for long-run growth. Governmental intervention is acceptable when it is utilized to uphold the market economy. Much of the governmental intervention and establishment of social welfare programs during the attempted recovery of the Great Depression was damaging to the economy. Many social welfare programs are holistically damaging to the economy. Other programs are beneficial to the economy; the Food and Drug Administration, for example, is beneficial because it allows for the overall health of the American people. Unlike the FDA, however, the Department of Human Services quite literally siphons tax payers" dollars in order to provide money to eligible low-income households; the result is unnecessary governmental spending that detracts from the workforce and causes a disastrous dependecy upon governmental handouts. It is not the fault of said low-income households, rather it is the fault of the system that the government has instituted. Additionally, altruistic social welfare programs are imperative but should be left to Non Profit Organizations of the private sector. In conclusion, governmental economic interference is inevitable, but it is only beneficial when it is utilized responsibly and intelligently.
Krugman, Paul and Wells, Robin. Economics, Second Ed. Worth Publishers. Print.
Sowell, Thomas. "Governmental Intervention in the Economy." N.p. 9 September 2010. Web. 22 October 2013.
"Donate." Bailout List: Banks, Auto Companies, and More. N.p., n.d. Web. 24 Oct. 2013.
"Foreclosures up a Record 81% in 2008." CNNMoney. Cable News Network, 15 Jan. 2009. Web. 24 Oct. 2013.
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