Reasons for government intervention in the economy pdf

A key economic debate is the extent to which should governments intervene in the economy?

• At one extreme, free-market economists/libertarians, argue that government intervention should be limited to all but the most basic services, such as the protection of private property and the maintenance of law and order.
• At the other extreme, Marxist economists argue that the government should intervene in all areas of the economy to ensure the most efficient and equitable distribution of resources.

In between, most economists believe it is a question of balance, with the government intervening in areas where the market fails to provide a desirable outcome.

Main areas of government intervention include:

• Provide public goods (e.g. national defense) from general taxation
• Provide basic health care and education standards.
• Environmental regulation and protection.
• Limit the power of monopolies.
• Regulation on worker rights.

Reasons for Government intervention

• Equality.

  In a free market, there is likely to be significant inequality and poverty. This is not due to a meritocracy, bu

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