Government Intervention in the Economy
In today's society, many different nations will choose to answer the fundamental economic question: to what extent should the government intervene in the economy to protect the interests of society, in a variety of ways. One nation may support the system of public enterprise, placing their beliefs and values on the far left of the economic continuum; another nation may be in favour of private enterprise, placing their beliefs and values on the far right of the economic continuum. The third system is the idea of a mixed economy. A mixed economy is in the middle of the economic continuum, supporting private enterprise with some government intervention; it is a balance between public and private enterprise. The more successful way to run a country's economy is to support the idea of private enterprise with some government intervention because it is more adaptable to changes in the economy and it is more stable. The two basic economic systems, public and private enterprise, are being practiced in some countries; however, the more successful and economically stable countries are those that have adapted mixed economy. Canada's economic system is based on Keynes's ideas about the role of government in the economy, known as mixe
However, in a private enterprise economy, there is large uneven distribution of income and wealth. Many will argue that government intervention prevents the economy's productive capacity to meet demand. Furthermore, during times of "busts", there are no safety backup plans for consumers and producers. If the economy is centrally planned, then there will be low unemployment rates because competition is not permitted; so the unskilled does not have to compete as much against the skilled. This is a positive result because it means that the economy is growing and the total output of the economy is increasing. During boom peaks in the economy, the government will raise taxes, interest rates, and lower government spending on goods and services to gain surpluses. Those who are skilled are able to earn much more money than those who are unskilled. Therefore, if there were government interventions in the private enterprise societies back then, then perhaps not as many lives would be lost to the Great Depression. Today, more and more nations are moving towards the middle position of the economic continuum. When the Great Depression stroked the world, enormous raise of unemployment occurred, and people's lives were getting more and more miserable because there aren't any government programs to help nourish the economy back to health. This acts as a "break pedal" on the economy because it prevents inflation from happening. Also, fixed wages and profits are discouraging people to be more dedicated to their work, and thus the economy. As for the less fortunate, they are aided with social programs such as health care, old-age pension plans, and welfare. This is a negative effect on the economy because if people are not as willing to contribute as much, it means that the total output of the economy is not very high. Over the past years, it has been shown that neither public enterprise nor private enterprise creates a very stable economy.
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