Govt. vs Economy
Synthesize information from at least three sources and incorporate it into a coherent, well-developed essay that argues a clear position on the role the government should take in regulating the economy.
Throughout history, influential thinkers such as Karl Marx and Adam Smith proposed economic theories which would forever alter the course of the world. The ideas of communism and capitalism were both responses to extenuating circumstances at the time which inspired these writers to advocate for change: Smith’s Wealth of Nations was published in response to the onset of the Industrial Revolution which caused the previous theory of mercantilism to become less relevant, whereas Marx’s Capital was published in response to the growing inequality between workers and elite within Britain’s capitalistic society. Although neither capitalism or communism can be said to be right or wrong when looked upon objectively, it is clear that the free-market principles of capitalism have been more effective in empowering the economies of countries such as U.S than the government-regulated economic policies of communism have been in modernizing countries such as the USSR. However, history has proven time and time again that government regulations must be put into place in order to prevent exploitation of the poor by the wealthy. During periods such as the Gilded Age and the Roaring Twenties in which laissez-faire capitalism was predominant, economic growth and innovation boomed at the cost of overspending and inflation which would ultimately lead to devastating recessions. In order to prevent such disasters from occurring, the government must take an active role in regulating the economy by providing financial relief programs during times of economic crisis; however, during times of general economic prosperity it should adapt a more hands-off approach in order to ensure innovations and growth within the private sector of the economy.
In a capitalistic society, it is inevitable that economic downturns will occur as consumers are driven to spend and borrow money and invest in the stock market, eventually leading to debt and inflation caused by over speculation and overspending. It is nearly impossible, however, to predict when these crashes will occur--otherwise, there wouldn’t be stories about people who decided to commit suicide after losing their entire life savings following the stock market crash in 2008. Rather than trying to prevent these crashes from occurring, which is futile, the government should instead step in during these times of penury by providing economic relief programs in the forms of bank bailouts, unemployment programs, and federal loans to revitalize the economy and encourage renewed spending. Such policies were instituted by president FDR through his New Deal Program during the Great Depression, which significantly stimulated the economy and helped millions of citizens recover from unemployment. Although critics of FDR may argue that he abused his power as president to tighten government control over the economy, the alternative of continuing a non-regulated laissez-faire economy throughout the depression was certainly much worse, as seen during Hoover’s presidency in which the unemployment rate rose to a high of 25%. Such strife among the poor working classes and farmers during the Great Depression is portrayed in the novel The Grapes of Wrath by John Steinbeck, which described the horrendous conditions suffered through by migrant workers, derogatorily deemed “Okies,” who migrated to California following the Dust Bowl(Steinbeck). Throughout the novel, Steinbeck describes the vast injustices committed by the wealthy elite against the poor in order to lambaste the corruption perpetuated by American capitalists, who sought to increase their own profits rather than save the lives of thousands of starving migrant families. The experiences of the Joads and other workers demonstrate the need for government regulation in times of depression in order to prevent economic inequalities from expanding and to provide a safety net for working class citizens. In fact, such policies have continued to expand throughout American society following the Great Depression and have been successful in limiting the extent of economic failure. For example, during the 2008 stock market recession, the government adopted a federal stimulus plan in order to give fiscal relief to states and lessen the impact of tax increases. This policy was extremely effective in cutting back the losses on what is still considered to be a calamitous recession, leading to a bank failure of only 0.6% of banks compared to 50% of banks in the Great Depression, 8.5% unemployment rate compared to 25%, and economic decline of 3.3% compared to 26.5%(CNN Money). Although far from being perfect, government relief programs offer a crucial cushion to what Winston Churchill believed to be the greatest failure of capitalism: “the unequal sharing of blessings” between the rich and the poor.
While Winston Churchill believed the inherent vice of capitalism to be inequality, he also stated that the inherent virtue of socialism was “the equal sharing of miseries.” Socialism and communism are both economic models which seek to eliminate economic inequalities and effectively prevent economic recessions from ever occurring by creating an austere, government-controlled economy in which wealth is more evenly distributed and the power of corporations is tightly regulated. The problem with this approach, however, is that it strangles innovation and progress in society by eliminating competition and reducing the incentive to work hard through the policy of collectivization, which equalizes incomes to the point where investors or inventors are no longer willing to risk time or capital for research. According to economist Milton Friedman, the extension of socialism in American society has led to the performing of government functions “far less well than is not only possible but than was attained earlier,” as seen by the fact that the nationwide network of roads and bridges and subway systems which was constructed during the Market Revolution is now no longer even able to be maintained by a considerably more wealthy and advanced country(Friedman). In general, the ideals advocated by socialism which call for government control of the economy are most effective during times of economic depression because they allow for the government to quickly implement policies which can restabilize banks and businesses and benefit the poor and unemployed. However, during times of general economic prosperity, heavy government regulations act as a major hindrance to societal growth, because it is precisely during these times in which corporations and businesses are able to thrive and foster some of the world’s greatest technological innovations, and strict regulations inhibit such breakthroughs. Take for example SpaceX, an aerospace company owned by Elon Musk which has made recent headlines for its revolutionary advancements in space research and technology. SpaceX is privately-owned, meaning that it is not under the control of the government and receives its own funding; therefore, it is not restricted by limited government funding and confining government policies. Without such hindrances to its operations, SpaceX has been able to become a world leader in terms of space research, working far more effectively than any government-regulated space industry. In a socialist or communist country, SpaceX and other corporations such as Apple and Facebook would not even be allowed to exist or would have their power severely limited, causing many of the groundbreaking technological devices we have today such as smartphones and laptop computers to not even exist. While it is true that without government regulation a capitalist economy can easily collapse and that the government has to intervene in times of economic instability, it is illogical to attempt to establish government control over the economy at all times because it is in essence an attempt to get rid of the bad and keep only the good without realizing the two are interconnected. Creativity, competition, innovation--these are the defining characteristics of capitalism, just as “inequality” and “exploitation” are as well. Thus, attempting to eliminate inequality and exploitation would undermine the core values of capitalism in the first place.
The issue of economy is one of that has been debated ever since the first caveman asked to trade his flint arrow for a stone hammer. Obviously, since then, economic theory has advanced exponentially and capitalism has since become widely accepted as one of the most effective models, although it clearly has major flaws as many people are quick to point out. However, as history has shown us, the government’s role in the economy has continued to change and develop throughout time as countries are forced to cope with new circumstances which challenge their very understanding of society. No country is completely capitalist, socialist, or community, but rather a blend of all three. The only way for a society to progress and move forward is for its government to continue to evolve its understanding of its relationship with the economy by incorporating different policies from a multitude of economic models, thus allowing it to adapt to new developments throughout the world in this new era of globalization.
Citations
Steinbeck, John. The Grapes of Wrath. Viking, 2014.
Goldman, David. “Great Depression vs. 'Great Recession'.” CNNMoney, Cable News Network, June 1, 2014, money.cnn.com/news/storysupplement/economy/recession_depression/. Accessed 21 April 2018.
Friedman, Milton. “Exploring Business.” University of Minnesota Libraries Publishing, University of Minnesota Libraries Publishing Edition, 2016. , 8 Apr. 2016, open.lib.umn.edu/exploringbusiness/chapter/1-7-governments-role-in-managing-the-economy-2/. Accessed 21 April 2018
Throughout history, influential thinkers such as Karl Marx and Adam Smith proposed economic theories which would forever alter the course of the world. The ideas of communism and capitalism were both responses to extenuating circumstances at the time which inspired these writers to advocate for change: Smith’s Wealth of Nations was published in response to the onset of the Industrial Revolution which caused the previous theory of mercantilism to become less relevant, whereas Marx’s Capital was published in response to the growing inequality between workers and elite within Britain’s capitalistic society. Although neither capitalism or communism can be said to be right or wrong when looked upon objectively, it is clear that the free-market principles of capitalism have been more effective in empowering the economies of countries such as U.S than the government-regulated economic policies of communism have been in modernizing countries such as the USSR. However, history has proven time and time again that government regulations must be put into place in order to prevent exploitation of the poor by the wealthy. During periods such as the Gilded Age and the Roaring Twenties in which laissez-faire capitalism was predominant, economic growth and innovation boomed at the cost of overspending and inflation which would ultimately lead to devastating recessions. In order to prevent such disasters from occurring, the government must take an active role in regulating the economy by providing financial relief programs during times of economic crisis; however, during times of general economic prosperity it should adapt a more hands-off approach in order to ensure innovations and growth within the private sector of the economy.
In a capitalistic society, it is inevitable that economic downturns will occur as consumers are driven to spend and borrow money and invest in the stock market, eventually leading to debt and inflation caused by over speculation and overspending. It is nearly impossible, however, to predict when these crashes will occur--otherwise, there wouldn’t be stories about people who decided to commit suicide after losing their entire life savings following the stock market crash in 2008. Rather than trying to prevent these crashes from occurring, which is futile, the government should instead step in during these times of penury by providing economic relief programs in the forms of bank bailouts, unemployment programs, and federal loans to revitalize the economy and encourage renewed spending. Such policies were instituted by president FDR through his New Deal Program during the Great Depression, which significantly stimulated the economy and helped millions of citizens recover from unemployment. Although critics of FDR may argue that he abused his power as president to tighten government control over the economy, the alternative of continuing a non-regulated laissez-faire economy throughout the depression was certainly much worse, as seen during Hoover’s presidency in which the unemployment rate rose to a high of 25%. Such strife among the poor working classes and farmers during the Great Depression is portrayed in the novel The Grapes of Wrath by John Steinbeck, which described the horrendous conditions suffered through by migrant workers, derogatorily deemed “Okies,” who migrated to California following the Dust Bowl(Steinbeck). Throughout the novel, Steinbeck describes the vast injustices committed by the wealthy elite against the poor in order to lambaste the corruption perpetuated by American capitalists, who sought to increase their own profits rather than save the lives of thousands of starving migrant families. The experiences of the Joads and other workers demonstrate the need for government regulation in times of depression in order to prevent economic inequalities from expanding and to provide a safety net for working class citizens. In fact, such policies have continued to expand throughout American society following the Great Depression and have been successful in limiting the extent of economic failure. For example, during the 2008 stock market recession, the government adopted a federal stimulus plan in order to give fiscal relief to states and lessen the impact of tax increases. This policy was extremely effective in cutting back the losses on what is still considered to be a calamitous recession, leading to a bank failure of only 0.6% of banks compared to 50% of banks in the Great Depression, 8.5% unemployment rate compared to 25%, and economic decline of 3.3% compared to 26.5%(CNN Money). Although far from being perfect, government relief programs offer a crucial cushion to what Winston Churchill believed to be the greatest failure of capitalism: “the unequal sharing of blessings” between the rich and the poor.
While Winston Churchill believed the inherent vice of capitalism to be inequality, he also stated that the inherent virtue of socialism was “the equal sharing of miseries.” Socialism and communism are both economic models which seek to eliminate economic inequalities and effectively prevent economic recessions from ever occurring by creating an austere, government-controlled economy in which wealth is more evenly distributed and the power of corporations is tightly regulated. The problem with this approach, however, is that it strangles innovation and progress in society by eliminating competition and reducing the incentive to work hard through the policy of collectivization, which equalizes incomes to the point where investors or inventors are no longer willing to risk time or capital for research. According to economist Milton Friedman, the extension of socialism in American society has led to the performing of government functions “far less well than is not only possible but than was attained earlier,” as seen by the fact that the nationwide network of roads and bridges and subway systems which was constructed during the Market Revolution is now no longer even able to be maintained by a considerably more wealthy and advanced country(Friedman). In general, the ideals advocated by socialism which call for government control of the economy are most effective during times of economic depression because they allow for the government to quickly implement policies which can restabilize banks and businesses and benefit the poor and unemployed. However, during times of general economic prosperity, heavy government regulations act as a major hindrance to societal growth, because it is precisely during these times in which corporations and businesses are able to thrive and foster some of the world’s greatest technological innovations, and strict regulations inhibit such breakthroughs. Take for example SpaceX, an aerospace company owned by Elon Musk which has made recent headlines for its revolutionary advancements in space research and technology. SpaceX is privately-owned, meaning that it is not under the control of the government and receives its own funding; therefore, it is not restricted by limited government funding and confining government policies. Without such hindrances to its operations, SpaceX has been able to become a world leader in terms of space research, working far more effectively than any government-regulated space industry. In a socialist or communist country, SpaceX and other corporations such as Apple and Facebook would not even be allowed to exist or would have their power severely limited, causing many of the groundbreaking technological devices we have today such as smartphones and laptop computers to not even exist. While it is true that without government regulation a capitalist economy can easily collapse and that the government has to intervene in times of economic instability, it is illogical to attempt to establish government control over the economy at all times because it is in essence an attempt to get rid of the bad and keep only the good without realizing the two are interconnected. Creativity, competition, innovation--these are the defining characteristics of capitalism, just as “inequality” and “exploitation” are as well. Thus, attempting to eliminate inequality and exploitation would undermine the core values of capitalism in the first place.
The issue of economy is one of that has been debated ever since the first caveman asked to trade his flint arrow for a stone hammer. Obviously, since then, economic theory has advanced exponentially and capitalism has since become widely accepted as one of the most effective models, although it clearly has major flaws as many people are quick to point out. However, as history has shown us, the government’s role in the economy has continued to change and develop throughout time as countries are forced to cope with new circumstances which challenge their very understanding of society. No country is completely capitalist, socialist, or community, but rather a blend of all three. The only way for a society to progress and move forward is for its government to continue to evolve its understanding of its relationship with the economy by incorporating different policies from a multitude of economic models, thus allowing it to adapt to new developments throughout the world in this new era of globalization.
Citations
Steinbeck, John. The Grapes of Wrath. Viking, 2014.
Goldman, David. “Great Depression vs. 'Great Recession'.” CNNMoney, Cable News Network, June 1, 2014, money.cnn.com/news/storysupplement/economy/recession_depression/. Accessed 21 April 2018.
Friedman, Milton. “Exploring Business.” University of Minnesota Libraries Publishing, University of Minnesota Libraries Publishing Edition, 2016. , 8 Apr. 2016, open.lib.umn.edu/exploringbusiness/chapter/1-7-governments-role-in-managing-the-economy-2/. Accessed 21 April 2018
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