Intervention of the States in the economy
Benjamin Dijan Anaïs Pilloud
Marie-Lou Duparc Sahra Rezgui
Table of contents
Introduction p. 3
Argument 1: the government’s role is so important that it creates demand, consumption and thus is able to resolve unemployment problems and to build a stronger economy
By Sahra Rezgui p. 4Argument 2 : A government does not necessarily need plenty of rules, laws and prohibitions but rather being more “involved” and thus more reagent.
By Sahra Rezgui p. 4
Argument 3: “the invisible hand” of Adam Smith
By Benjamin Dijan p. 5
Argument 4: The State asphyxiates the market through socials costs too expensive.
By Anaïs Pilloud p. 7
Argument 5 :Regulations arrive too late and are not renewable
By Marie-Lou Duparc p. 8
Conclusion p. 9
For many years now, the financial crisis has been one of the main issue in many countries and for many economies. Indeed, such an event shows the limits of the liberal era we are living in and allows us to question ourselves about the government role.
A debate isone of the best opportunities to put forward the key points of an issue and analyse them.
Because of the complexity of the problem, we had a good chance to understand the system namely by analysing the intervention of the American government in the economy and linking it to the financial crisis.
Moreover, it was a real opportunity for us to get through a very constructive discussion withpeople that do not necessarily share our own point of view.
So as to succeed in defending a position, we had to elaborate very strong arguments. Even if our main goal was to convince about having a small government; we first ask ourselves about the two questions:
- Should the state intervene in economies?
- Or the market should be regulated by itself?
Many theories and examples havebeen given through centuries to support both sides but it still remains very hard to define what would be the best for each economy.
Argument 1 :
In many theories (Keynes for example), the government’s role is so important that it creates demand, consumption and thus is able to resolve unemployment problems and to build a stronger economy. Nevertheless, a historical fact is a perfect proof thatshows the limit of this concept: the first oil crisis.
Indeed, in the 70’s, Keynesian policies proved to be inefficient for the resumption of the economy after the first oil crisis. Such an invent clearly shows the incapacity of the government in some cases of crisis to resolve the problems the economy is confronted to.
As a reaction of such a failure, a liberal revival appears. The70’s made the liberal movement in which supply meets demand become more and more popular; the nonintervention of the state has been advocated for a freer and more spontaneous market which should assures a balanced economy.
In the same way, we can think of other institutions that would be independent and that would fix rate policies, fiscal policies, price policies….
Argument 2: A governmentdoes not necessarily need plenty of rules, laws and prohibitions but rather being more “involved” and thus more reagent.
A very strong and authoritative government that regulates each “sector “of the state (economic sphere, financial sphere…) in a strict way is not necessarily a good thing. Indeed, we may think that the crisis may come from a lack of rules within thefinancial sphere. However, even if rules are essential to give a “frame” to the state, the efficiency of a government should not be based on the rigidity and the abundance of its laws and prohibitions but rather on a better knowledge of each sector and most of all how it works exactly, how it evolved within the past few years/months/weeks. The study, the regular analysis of each one would be a more...
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