Government Economic Intervention Essay

1750 Words 7 Pages
Government Economic Intervention
Introduction
The United States began its existence as a country newly free of the British Colonial ways and quickly adopted capitalism and its free market, Laissez Faire, ideology. As the economy grew, so did the government and their desire to influence or control the economy, as a means of maintaining equilibrium and fairness in the market place. More than two centuries later, the people of the United States began to doubt their Governments growing desire to intervene in the economy, which has gradually evolved the US into a mixed market economy from the pure free market capitalists we once were. Economic Interventionists and advocates of Laissez Faire have great supporting arguments for why their point
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Non-exclusion means that it is not feasible to exclude a consumer from reaping the benefits of or consuming said product. Simply stated, the product is available to all consumers at all times. Non-rivalry means that even if the good is consumed by one person, it is still available for consumption by another, or that it is not physically consumed during its use. Examples of public goods are national security and roads, because both are available to all consumers at all times, and both can be consumed, or utilized, and it is still available to others. The reason public goods cause their markets to fail is because they are available to all consumers at all times, consumers generally are not willing to pay for them, because even if they do not pay for them, they are still available for them to use. Because no one is willing to pay for a public good, but still demand them, the market will base their “How Much” decision on understated demand levels. This causes the market to under-produce the goods. To alleviate this failure, Governments will generally set demand levels and finance its production through taxation, which forces all consumers to pay for the good. Roads are financed through taxation, either federally or by the state depending on the type of road, which are constructed and maintained to the benefit of all consumers. Without Governmental economic intervention, concerning public goods, there would not be enough

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