The Instigator
CMcCaddenNHS
Con (against)
Tied
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The Contender
dbousquetnhs
Pro (for)
Tied
0 Points

Governmental Economic Intervention

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Voting Style: Open Point System: 7 Point
Started: 10/31/2013 Category: Economics
Updated: 3 years ago Status: Post Voting Period
Viewed: 658 times Debate No: 39754
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. 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
dbousquetnhs

Pro

You don't need to look very hard to realize that government intervention in the economy is unbelievably important. During his years in office, President Bush put into place many policies that would lessen government intervention in the economy, which he believed would stimulate economic growth. He cut taxes on the wealthy from 39.6% to 35% (Bartlett, Bruce). He believed that more money in the hands of the wealthy would "trickle-down" to the lower classes. What actually happened was a rapid increase in income inequality that actually caused the budget deficit to increase because the government was collecting less money from wealthy taxpayers. President Bush also supported free trade and worked to build upon the policies established by his father when he was President. President Bush's free trade policies failed utterly. The US's trade deficit, that is the difference between what we export and what we import, reached historic levels under President Bush. His hands-off approach to trade increased the trade deficit from $379 billion in 2000 when he took office, to $700 billion in 2007 (English, John). His free trade policies also encouraged companies that normally manufactured their goods in America in order to avoid tariffs to leave the country in search of cheaper labor, putting their former employees out of work. In fact, between 2000 and 2008, 3.4 million manufacturing jobs were lost in America (English,John). There is nothing wrong with letting the economy run it's course because the economy is the backbone of any nation. The economy creates jobs, and provides people with an income, which allows the government to collect income taxes, allowing the government to function. Problems arise when international corporations who employ hundreds of thousands of Americans decide to pursue their profit margin and line the pockets of their executives and move production out of the country, leaving hard-working Americans to provide for their families without an income.

Works Cited
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.
Debate Round No. 1
CMcCaddenNHS

Con

Indeed, it is obvious that governmental intervention and spending are integral to the economy, but that"s not to say that intervention is a good thing. President Bush did indeed reduce income tax, but he did not do so exclusively "on the wealthy." President Bush reduced income taxes, and thus Americans of all socioeconomic classes paid fewer taxes. The amount of money saved by the average American due to a tax cut is relative to his income. Therefore Bush"s tax cuts were not attempts of "trickle-down economics" but rather intentions of putting more money in the average American"s pocket " this includes both the rich American and the poor American and everyone in between. President Obama similarly issued approximately $288 billion in tax cuts as part of his 2009 American Recovery and Reinvestment Act. (Major L. Clark, III). President Obama evidently believed in part that reducing taxes would stimulate small businesses and the working class.

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).

Works Cited
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

Pro

Originally forfeited, see coments.
Debate Round No. 2
CMcCaddenNHS

Con

Since the opposition decided to forfeit the discussion will return to the idea of the prevalence of the market economy. A laissez-faire "hands-off" governmental approach to the economy allows for the "invisible hand" to guide along the economy with individuals acting in their own interests and making for the most efficient allocation of resources. The ideals behind this approach allowed for America to become the world"s largest and most thriving economy in the world. Economic governmental intervention is also an inevitability, but it is the extent to which the government should intervene that remains contested.

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.

Works Cited
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.
dbousquetnhs

Pro

The point of government intervention in the economy is not only to encourage growth, but to protect the consumers of America from the corporate greed and corruption of big business. During the most recent recession, big international banks like Bank of America engaged in the risky business practice of giving loans to people they knew could not pay them back. As a direct result of this practice, foreclosures rose 81% in 2008 (CNN Money), while the stock of Bank of America plummeted and the company was in danger of declaring bankruptcy. The government had no choice. Hundreds of thousands of people had already lost their houses, but if Bank of America went the same way as the Lehman Brothers or Fannie Mae and Freddie Mac, millions of hard-working Americans could lose their homes or face much higher interest rates and mortgage payments if their mortgages were bought by other large banks. The government under President Obama stepped in and gave Bank of America a total of $45 billion worth of taxpayer dollars (Donate) to prevent a total meltdown. Bank of America defines what it means for an international company to be "Too Big to Fail." Their dishonest and toxic business practices contributed to the crippling recession of 2008, and yet, they received billions in a government-initiated bailout because the collapse of the company would be catastrophic to the American people and the economy not only in America, but all over the world. When big business is behaving in a way that is morally and economically wrong, it should not only be the government"s right, but their obligation to step in and protect the American people, and if possible, punish the corporation that is responsible.
Works Cited:
"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.
Debate Round No. 3
CMcCaddenNHS

Con

Capitalism inherently encourages entrepreneurship and the most efficient means of acquiring profit. With this comes the opportunity to profit at the expense of the wellbeing of others. There is indeed a fine line between corporate greed, which is to be expected, and unethical business practices, which are not acceptable by any means. Wall Street champions of private equity and investment banking did indeed engage in unethical derivative investment practices that stifled consumers and average Americans for the sake of corporate profits. (CNN Money). This led to the deterioration of the housing market and the financial collapse of 2007 and the subsequent governmental bailout of firms such as Fannie Mae and Freddie Mac. Instead of the Keynesian intervention following the collapse, the government should have enforced regulation to prevent the unfair practices used by Wall Street banks and the following recession.
Efficient governmental intervention is necessary in order to uphold free markets and the rights of consumers. Although hindsight is 20/20, it would have been ideal for the US government to intervene by regulating unethical banking practices rather than to intervene by bailing out Wall Street Banks after the meltdown. Governmental regulation is much less costly and much more efficient than governmental bailouts. As Ben Franklin said, "An ounce of prevention is worth a pound of cure." (Holcombe). Effective regulation is beneficial to the economy because it allows for the health of the market economy. Regulation also entails much less intervention and much less governmental spending than Keynesian government spending does.
With our nation"s baffling deficit, America quite literally cannot afford to continue making economic mistakes. While intervention in the form of governmental bailouts of private firms is seen as socialistic, governmental intervention, when used to uphold the free market as with regulation, is far from socialistic. Thus governmental economic intervention is necessary but should only be utilized to promote growth and uphold the free market.

Works Cited
"Foreclosures up a Record 81% in 2008." CNNMoney. Cable News Network, 15 Jan. 2009. Web. 24 Oct.
2013.
Holcombe, Randall G. Economic Freedom and Economic Growth. The Independent Institute. 1 February
1998. Web. 28 September 2013
dbousquetnhs

Pro

dbousquetnhs forfeited this round.
Debate Round No. 4
CMcCaddenNHS

Con

Prior to the Great Depression, the US Government"s role in the economy was overall minimal. Since 1930, however, the government has been more concerned with repairing and preventing market failure using fiscal and monetary policies. While the sheer size of the modern US economy requires some macro-economic federal intervention, this intervention should be limited. The role of the government in the economy should simply be to utilize efficient policies in order to uphold the integrity of the free market. Smithian economics has served our nation well, but it is unrealistic to suggest that the government should not intervene whatsoever in the economy. Regulation is very important in order to uphold capitalism and the market economy. (Krugman). It is important to promote free markets, which are conductive to growth, rather than to use governmental intervention and spending as a means of growth. In order for capitalism to thrive, the government needs to promote a stable currency, private property rights, consumer protection, and market regulation. (Holcombe). Smithian economics works idealistically, but realistically, the government plays a major role in upholding the free market system. In conclusion, the government undoubtedly plays a major role in the economy, but its role should be to merely promote the wellbeing of free markets in order for capitalism to thrive.
Krugman, Paul and Wells, Robin. Economics, Second Ed. Worth Publishers. Print.
Holcombe, Randall G. Economic Freedom and Economic Growth. The Independent Institute. 1 February 1998. Web. 28 September 2013
dbousquetnhs

Pro

dbousquetnhs forfeited this round.
Debate Round No. 5
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