The education and health were both provided by the government so as to increase the general living standard of the people. In the creation of the National Health Service, most people had to pay for their healthcare directly. A trip to the doctor meant paying a fee. People faced choices about how to spend their money. If they wanted to go to the doctor, the decision had an opportunity cost. For the poor, it might have meant not eating or not being able to afford new clothes. Producers received treatment was not determined by their ability to pay.
The government will try to reduce income inequality by imposing a progressive tax system where higher income earners are taxed more than the lower income earners. In this way, the gap between the rich and the poor will be narrowed. The rich will get richer while the poor will get poorer. Consumers are the ones who would determine and influence the types and quantities of good to be produced. Consumers are free to choose occupations they are qualified. They express their preferences though their ability to pay, in order to maximum satisfactions and minimum expenditure. Producers respond to consumers preferences and produce whatever consumers demand, in order to maximise profits and minimise costs. The government may produce goods that are not required by the public. These goods do not contribute to the general welfare of the consumers. For example, military, telephone services, road and others.
The government will also control the existence of monopolies. A monopolist is a single seller of a particular commodity who usually reduces his output to keep prices at artificially high levels. In this way, the consumer suffers and in order to avoid exploitation, the government needs to control and regulate the power of monopolists. The government given a tax consumers and producers who can buy land and other goods.
There are avoid duplication and hence wastage of resources which are scarce. This is when only a single producer is necessary to undertake certain economic activities to avoid unnecessary competition. For example, in the bus industry, firms were allowed to compete freely on national and local routes. Similary, government support for research through contracts with companies making technologically advanced goods such as computers and military hardware illustrates how employment in private industry can be sensitive to state patronage.
Thus people pursing their own self-interest through buying and selling in competitive markets helps to minimise the central economic problem of scarcity, by encouraging the efficient use of the nation’s resources in line with consumer wishes. Lack of competition and high profits may remove the incentive for firms to be efficient. The government might enforce its plan even if they were unpopular.
