Us, Govenment Intervention

Topics: United States, United States Declaration of Independence, Ronald Reagan Pages: 6 (1882 words) Published: January 8, 2013
Essay Question; The United States of America

Examination of the factors that explain why US citizens, in general, prefer free market solutions over government intervention to solve their economic problems.

To begin I will define, respectively, government intervention and free market economics, to understand how the mechanisms operate. Then I will examine historical factors as well as political scandals, in order to learn how they, over time, have affected the Americans view upon the government, with the result of a preference for free market solutions.

1. Definition of, respectively, government intervention and free market economy in the US 2. Historical factors
* Declaration of Independence
3. Political scandals and events
4. Conclusion

Government Intervention:
Government intervention is actions enhanced by the government in order to affect economic activity. The government is meant to intervene in voluntary market activity, taxes, price control, various regulations and control over government spending including common types of government intervention. The general reason for government intervention is that voluntary decisions by businesses or consumers fail to succeed. More theoretical, there are three kinds of policies used by the government in order to influence the macro economy. Firstly there is fiscal policy, which consists of taxes and spending. Secondly there is monetary policy, which are tools that the Federal Reserve uses in order to control the quantity of money in the economy and thirdly there are growth and supply-side policies that focus on stimulating supply and not aggregate demand.

Free market economy
Free market economy is a system where buyers and sellers are responsible for their choices. In a free market prices control the distribution of goods and services. At the same time, the forces of supply and demand for a particular product fix the price. When demand for a product falls and the supply is high, the price will fall and when a supply is poor and cannot meet the demand of the product the price will rise. Furthermore, the term free trade, where the government imposes no tariffs or grants, is also a free market.

Historical Factors
Americans have their doubts about the government, these doubts may, among other things, be connected to historical factors and how the Americans feel about the nation. Only 20% of Americans are satisfied with the state of the nation and just 34% trust the government. Why is that? First of all, Americans worry about the moral health in society and, in general, feel discontent concerning the honesty of elected officials. The generations of Americans from and after the Vietnam era and Watergate scandal are sceptic about political leaders and the older generations’ opinion about the government are more influenced by failures of different acts.

The Declaration of Independence:
First of all it is evident to take a look at The United States Declaration of Independence. It is essential in the history of the US. Americans wrote the Declaration in 1776 and it declared the end of the American colonies from the British Crown. With this document, the free and individual American citizen was born. Thomas Jefferson was one of the principal authors of the declaration and he wrote some very important and famous parts of the declaration, which may help explain the American perspective of government intervention and free market solutions.

Quotes by Thomas Jefferson:
“That government is best which governs the least, because its people discipline themselves.” This should most likely be interpreted as an encouragement for the people to act as free individuals and not be marionettes controlled by their government. “When the government fears the people, there is liberty. When the people fear the government, there is tyranny.” Liberty is when the people have the last saying and not the government - democracy and freedom of the people...
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