Every economy will have the cycle of prosperity, recession and depression. The question is to what extent does government intervention aid that prosperity or depression. For any society to succeed they must find a middle ground, and accompany a mixed economy or a traditional economy for their economic growth and survival. The documentary “Commanding Heights: The Agony of Reform” directed by Daniel Yergin and article “Forget Adam Smith. Whatever Works,” written by Pete Engardio are two media examples that discuss how economies struggle with too much or too little government intervention. Through reasonable regulation of businesses and financial planning/management, they can solve their economic problems for the future and have more innovation
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In Bolivia, the government was spending 30 times more than they received as income from taxes (Yergin, 2003). They had a 60,000% inflation rate, making the 1980’s known as “the lost decade” of Latin America (Yergin, 2003). To fix this they had to stop borrowing from central banks, cut tariffs and balance their budget to stop overspending (Yergin, 2003). This was a kick-starter for other countries on how they could cut high inflation rates and grow their economy (Yergin, 2003). The United States government committed $250 billion to the U.S banking system, giving a financial guarantee to depositors and market investors (Engardio, 2008). They also have $1.7 trillion in corporate debt (Engardio, 2008). Despite the money given to the bank, Engardio writes that America will not have voting rights on the preferred shares it payed for, the banks will. For America to begin to bail itself out, they need to invest in the growing markets such as renewable energy, autos, and nanotech instead of bank shares (Engardio, 2008). He also writes that in a country like America, it is impossible to make money without producing things, that the government must control. The idea of this can be nerve-wracking because many new innovations that are given financial help, will not produce returns for at least five years (Engardio, 2008). Even then, the company may fail and not produce any money to give back to …show more content…
For them to thrive they need more government intervention to control their investments, debt, and regulations. Countries in Latin America as well as Bolivia and India needed less government intervention (Yergin, 2003). Their high control on regulation and overspending meant they were behind on modern technology and had incredible inflation rates and debt. For an economy to succeed it must find a middle ground or mixed economy. One where democratic governments control what is produced, but also give citizens the ability to make some of their own business decisions will help them, their businesses and citizens thrive economically. This will help with environmental issues, production rates and keeping a stable
In Bolivia, the government was spending 30 times more than they received as income from taxes (Yergin, 2003). They had a 60,000% inflation rate, making the 1980’s known as “the lost decade” of Latin America (Yergin, 2003). To fix this they had to stop borrowing from central banks, cut tariffs and balance their budget to stop overspending (Yergin, 2003). This was a kick-starter for other countries on how they could cut high inflation rates and grow their economy (Yergin, 2003). The United States government committed $250 billion to the U.S banking system, giving a financial guarantee to depositors and market investors (Engardio, 2008). They also have $1.7 trillion in corporate debt (Engardio, 2008). Despite the money given to the bank, Engardio writes that America will not have voting rights on the preferred shares it payed for, the banks will. For America to begin to bail itself out, they need to invest in the growing markets such as renewable energy, autos, and nanotech instead of bank shares (Engardio, 2008). He also writes that in a country like America, it is impossible to make money without producing things, that the government must control. The idea of this can be nerve-wracking because many new innovations that are given financial help, will not produce returns for at least five years (Engardio, 2008). Even then, the company may fail and not produce any money to give back to …show more content…
For them to thrive they need more government intervention to control their investments, debt, and regulations. Countries in Latin America as well as Bolivia and India needed less government intervention (Yergin, 2003). Their high control on regulation and overspending meant they were behind on modern technology and had incredible inflation rates and debt. For an economy to succeed it must find a middle ground or mixed economy. One where democratic governments control what is produced, but also give citizens the ability to make some of their own business decisions will help them, their businesses and citizens thrive economically. This will help with environmental issues, production rates and keeping a stable