Laissez-faire vs Government Intervention

Should our economy be run by a doctrine that was made popular by a group of French writers called physiocrats in the mid-1700s? This doctrine is called laissez-faire and it literally means to let or allow to do(The Family Education Network). It is a theory of economic policy which states that government generally should not interfere with decisions made in an open competitive market. These decisions include policies such as setting prices and wages. According to the doctrine of laissez-faire, workers are most productive and a nation's economy functions most efficiently when people can pursue their own economic interest freely. The economy of the United States is no where close to being a laissez-faire system. In fact, government spending and intervention in the economic sector has ballooned. According to the Federal Money Retriever, in 1998 alone, the government spent over $37,733,526,000 in agricultural commodities, loans, marketing, and stabilization. The role of government has grown to a point where the benefits of government intervention are far outweighed by the negative effects on the economy as a whole.

One of the major areas in which the government intervenes is in the agricultural sector of the economy. The government has three ways it can intervene and help its producers. These ways include price policies, direct payments, and input policies. Price policies have the largest effect on producers. Tariffs, quotas, and taxes are just a few examples of price policies. While these policies bring revenue into the government, in the end they hurt consumers. Each of these policies raise the prices of both imported and native goods. They are designed to help stabilize prices and give the native producers a chance to compete with foreign goods. Under the doctrine of laissez-faire, the government would not interfere with prices and the native producers would be forced to lower their prices, giving the nation's citizens a better deal in the market.

The use of taxes is one of the government's favorite ways to make its presence known in the economy. While this method seems blatantly obvious, many of the ways the government uses the money collected by taxation is not. Some of the money it takes is used to fund other programs designed to "protect" consumers and to "create" jobs. Be...

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...t, there is no need for the government to intervene.

works cited:

Dommen, Arthur & Carl Mabbs-Zeno. 1989. Subsidy Equivalents: Yardsticks of Government Intervention in Agriculture for the GATT. United States Department of Agriculture: Washington D.C.

Federal Money Retriever. 1998. U.S. Federal Funding Numbers/ By Subject Terms. "http://www.fedmoney.com/fs-subj2.html"

Kaz. 1998. How the Government Spending Creates Jobs. "http://hotbot.lycos.com/director.asp?target=http%3A%2F%2Fwww%2Esmart%2Enet%2F%7Ekaz%2Fspending%2Ehtml%3Fpt&id=10&userid=4EvOxepkQhws&query=MT=government"

Ringer, Robert J. 1979. Restoring the American Dream. Harper & Row: New York.

Robbins, Lord. 1976. Political Economy: Past and Present. Columbia University Press: New York.

The Family Education Network. 2000. "Laissez-faire." "http://www.infoplease.com/ce5/CE029401.html"