Government Involvement in the Economy: A Double-edged Sword?
Government Involvement in the Economy: A Double-edged Sword?
Ask an average U.S. citizen about their stance on government in the economy, and most will agree that government must play some role. The question is, where is the line drawn and at what cost? This cannot be answered without a comprehensive analysis of the political economy and history of economics in the United States. Since such a thorough analysis can not be done within this paper, the goal is not to answer the question, but to provide insight and understanding in the field of economics within our political system. Government has always played a role in the economy (regulating commerce since the very beginning) but one cannot deny that it has played a more crucial role for the past century. Teddy Roosevelt understood that in order to appease the class antagonisms and stabilize the rapidly growing economy, slow reforms needed to be made— such as trust busting and increased regulation of business. During the depression, Franklin Roosevelt’s administration intervened in such a way that provided relief from the economic woes of the times to millions of Americans. In the 1970’s, the gold standard was replaced by the central banking system, which would place more economic control in the government’s hands. Countless other examples can prove to anyone the magnitude of the intervention the economy. To gain a better and broader view of this issue, the difference between ‘intervention’ and ‘involvement’ must be understood. Intervention is a short term solution to long term problems created by the intrinsic contradictions and barriers within the capitalist economy— called the business cycle. Involvement includes long term goals achieved through the implementation of regulations and economic policies that seek to solve many problems of the economy. In the current political sphere, government is the only marginally democratic way to ensure fairness and justice within the economy. What are the main aspects of
Ask an average U.S. citizen about their stance on government in the economy, and most will agree that government must play some role. The question is, where is the line drawn and at what cost? This cannot be answered without a comprehensive analysis of the political economy and history of economics in the United States. Since such a thorough analysis can not be done within this paper, the goal is not to answer the question, but to provide insight and understanding in the field of economics within our political system. Government has always played a role in the economy (regulating commerce since the very beginning) but one cannot deny that it has played a more crucial role for the past century. Teddy Roosevelt understood that in order to appease the class antagonisms and stabilize the rapidly growing economy, slow reforms needed to be made— such as trust busting and increased regulation of business. During the depression, Franklin Roosevelt’s administration intervened in such a way that provided relief from the economic woes of the times to millions of Americans. In the 1970’s, the gold standard was replaced by the central banking system, which would place more economic control in the government’s hands. Countless other examples can prove to anyone the magnitude of the intervention the economy. To gain a better and broader view of this issue, the difference between ‘intervention’ and ‘involvement’ must be understood. Intervention is a short term solution to long term problems created by the intrinsic contradictions and barriers within the capitalist economy— called the business cycle. Involvement includes long term goals achieved through the implementation of regulations and economic policies that seek to solve many problems of the economy. In the current political sphere, government is the only marginally democratic way to ensure fairness and justice within the economy. What are the main aspects of