Too much government control can lead to unaggressive technological change in the economy. In the USSR government control in the economy was very high. Quotas were raised by the government substantially o provide everyone in the country with the things they needed. However because of this the government focused on quantity over Quality. An example of this is the car, the lada. This car was created in 1966 after the 1960s car of the year, the fiat 124. With this as it base model the government set out to make as many cars and as quickly as possible making 2500 cars per day. These cars were also for a low low price. However the car was undependable, leaking break fluid, rusting and peeling frames, terrible fuel economy and constant stalling. Ladas were unsuccessful except for show how too much government control can stunt the economy.
With less government control more disparity is created in society. When Ronald Regan took office in 1982 he promise America that he would improve the economy. His plans included he would abolish national debt, limit government spending money, cut taxes, reduce government intervention and balance the budget. To do this Regan created Reganomics. With reganomics Regan cut all social programs. Food lunch programs were cut down along with food stamp programs and Medicare. When Regan did this increased the gap between rich and poor. In 1988 34 million people were poor and another 30 million people were near poor. The poorest 10% earned $3286 where the richest 5% earned $129 762. In 1977 before these cuts were made the poorest 10% made $3673 where the richest 5% earned 95 475. These are substantial changes that caused great disparity all because the government became more right winged.
Some government control in an economy leads to better protection of its people. When you see a government that has a minor hold of the economy in its nation you will find a well-balanced society. Canada is a nation as such. Canada is a welfare capitalist state where the government intervenes to keep the economy thriving and the people protected. Citizens pay taxes toward social programs that look after those who are not as fortunate as others. Some of these programs include Medicare, unemployment and workers compensation. When you look after the people your economy will flourish. Education for people becomes higher and standard of living is increased for everyone. The population below the poverty line in a welfare capitalist nation Canada is 5.7%. In china, a socialist state, 10% of their population is under the poverty line. This shows that with little government control the society can flourish because it has the opportunity go to advance and know that the government will have a safety net when anyone in society may need it.
Too little government control in the economy can lead to times of great boom or bust. In America, the economy was just starting to become very promising. In the 1920s times were flourishing and people in the USA were borrowing and investing in the stock market. Times were good and people lived well. Because more people had started borrowing money and investing, the money never really came around and the stock market crashed. People were unable to pay back their debts to the banks and many went bankrupt. This then was one of the factors that sparked the great depression, in which life was terrible. Many people lost jobs, houses and property. Without government intervention, the economy can experience times of vast fluctuation, so it is beneficial when the government is involved in the economy.
However too much government control in the economy can lead to the abuse of people for better state being. When Stalin gained control in the USSR after Lenin’s death, he put in his 5 years plan. With the 5 years plan, he decided that he would make a change that would happen in the next five years, and there were 5 of these plans. One of the plans was to build up his military. Do to so, Stalin needed money. To raise funds, Stalin created collectivization. He then ordered to collect all the grain from the Ukraine, raising quotas 44%. No one was to receive grain until enough money was made in exports. By doing this, there was no grain left for the people of the Ukraine. And When people were believed of hiding food, soldiers would barge into their homes and search for more grain. When Stalin finally took all the grain, he ended up killing 6-7million Ukrainians. This was known as the Ukrainian famine of 1932-33. Stalin had committed genocide. This is an extreme of what too much government control can do to a society… just for gain in economy.
With some government control interaction in the economy, standard of living is improved. With government control, the government helps to stabilize the economy. By serving tax breaks or heightening taxes, the government can somewhat control the amounts that people spend and put into the economy. When a nation has a stable economy, it can focus on supplying to others such as exports. Only when a nation Like Canada, who has a well balanced source of government involvement, will be able to sustain such a healthy economy, thus shown in their high GDP rate of $27 700. Compared to a socialist economy such as china, whose GDP is $ 4 300 per capita. This shows that government intervention can be helpful to sustain a strong economy.
Government interaction in the economy is a necessary thing for every nation. However to what extent is a question that must be faced. To have too much control you risk the consequences of the abuse of people, poor quality goods and lack of advance in products. But if you have too little you face booms and bust, disparity, and an unstable economy. Finding equilibrium of the two extremes is a problem that nations struggle with constantly and a popular choice of many, including the successful Canada, is welfare capitalism. It’s the best choice because it promotes the ideals of both capitalism and socialism. The spirit of capitalism with its free trade and market economy with advancing products and aggressive markets and the control of socialism with state programs like healthcare and unemployment coverage, education taxing and the regulation that government can provide. So when asked the question, to what extent should government be involved in the economy an impeccable answer that comes to mind is welfare capitalism.
