Thursday, December 19, 2019

Government Intervention in Economic Welfare Essay - 537 Words

In pure market economy, price has been set by price mechanism where it coordinates the interaction between demand and supply resulting in a price changes. According to an economist Adam Smith (1776), in his book â€Å"The Wealth of Nations†, price mechanism is likened to be an â€Å"invisible hand† which will coordinates the decision made by consumers and suppliers while the economic system are working automatically. However, the theory of â€Å"invisible hand† is not absolute. The market economies requires institution such as government to implement policies and making decisions to maintain market and avoid market failure like monopoly and negative externalities. Therefore, government interventions are clearly crucial in the economy to maintain the†¦show more content†¦Based on the Horticulture Director General Achmad Dimyati (2010) statement, Indonesia have a low level consumption of fruits and vegetables. Food and Agriculture Organization (2010) state d that consumption of fruit and vegetables are recommended to be average of 65 kilograms and 73 kilograms per capita per year. Where Indonesia consumptions are far bellow the recommended number. While due to shortage in their supply, in June 2010 prices of rice and chili has increased by 2.67% and 45.7% (BPS, 2010). This clearly shows that action have to be done by the government, not just to varying people’s diet and to improve nutrion, but to stabilize the prices of horticultural products as well. Where at the end, it will both benefits consumers and producers. Government now is working on a bill to improve fruit and vegetables supplies, in order to guarantee a continuous supply of horticulutural products. Government will try to improve market outcome by facilitating better capital access, financing and providing guarantees. This will prevent shortage of supply in market and will avoide prices to increase. Government will also have to come out with policy in order to achieve goal of equality. Dadi Sudiana, chairman of Chili Agrobusiness Association stated that â€Å"We always [profit less] from high priced staple foods such as red chili†. Where things get worsen when farmers are forced to split their profit withShow MoreRelatedLiberalism is define by the desire to minimise the role of the state, discuss.1515 Words   |  7 PagesAlthough all liberals agree on individual freedom, when it comes to the role of the state they are split down the middle. On one side there are the classic liberals who believe in as little state interventio n as possible, and on the other side there is the modern liberals who believe state intervention is necessary as it can develop people and create equal opportunity. When looking at a liberal view of the state it is necessary to focus on both modern and classic liberals and compare their ideasRead MoreSocial Democracy And Its Impact On Social Policy Essay1512 Words   |  7 Pagesand conservatism have impacted social policy to support the citizens within New Zealand. They contrast in ways, which they are based upon. Social democracy bases their ideas in state intervention to support the welfare creating egalitarianism. Whereas conservatism base their ideas by providing minimal state intervention, where tradition social institutions are conserved and natural authority is established. Both ideas support individuals by providing a good vision; this is achieved through the stateRead MoreGovernment and Market Failure Essay1687 Words   |  7 Pages In micro-economics market failure is characterized by resource misallocation and subsequent Pareto inefficiency. Just as the invisible hand falters, so is the case that the unregulated markets are incapable of solving all economic problems. In laissez-faire economy, market models mainly monopolistic, perfect competition and oligopoly are expected to efficiently allocate resources for the â€Å"welfare benefit† of the society. However individualistic and selfish private interests divert the public benefitsRead MoreThe State Hampering Of A Capitalist Economy Essay1707 Words   |  7 Pageswas against state intervention and believed in the neoliberalist movement, which meant that firms would are able to privatize their businesses and still trade in free markets. Hayek identifies that capital theory â€Å"was an area where he found that the coordinating processes of the market were underappreciated† and that the â€Å"evolved institutions and market competition as irrepla ceable means for social coordination† (White, 1999, pg. 753-4). Despite Hayek’s claims of state intervention, it has been provedRead MoreLong-Term Investment Decisions1267 Words   |  6 PagesLong-Term Investment Decisions Government Regulations Government regulation borders within the mandated needs in the economy to strike a balance between the market activities and social welfare of the people. The role of government in the market has been seen as one that is indispensable in an economy where this balance is needful. Contrary to this argument, it has also been observed that government involvement in the market economy can to a large extent lead to sub-optimal results. It is agreeableRead MoreInternational Trade : The United States1461 Words   |  6 Pagesto trade with borders. The United States implied the government intervention since the great depression through the financial sector rescue packages and this way followed by several countries, like Great Britain and other European. Although many countries are doing the free trade, it occurs when government did not intervene, but the government should intervene in international trade. However, several people said that government intervention in international investme nt and trade often results inRead MoreTo What Extent Has Modern Liberalism Departed from Classical Liberalism 40933 Words   |  4 Pagesany form of intervention by the state. John Locke believed therefore that only a minimal state should exist and he continued to push his belief that the individual has the right to ‘life, liberty and property’. Modern liberals differ as they do see the need for occasional state intervention but on the whole would agree with Locke’s views on rights. Classical Liberals are anti ideas from conservatives that suggest the state should have much control over individuals in society. Economic liberalismRead MoreMixed Economic Systems760 Words   |  4 PagesEconomic system of a country Identify and evaluate the economic system that Malaysia is adopting. Discuss the rationale of Malaysia’s economic system in terms of utility maximisation and pricing mechanism for distribution of goods and services. An economic system is the combination of the various agencies, and entities that provide the economic structure that defines the social community. Malaysia has adopting mixed economic systems. Mixed economic system is an economy where there is moreRead MoreRoles of the US Government in the US Economy Essay1142 Words   |  5 PagesHow the US Government plays a role in our US Economy Fiscal responsibility is an important part of stability and the government must focus on maintaining the economic stability. As we all know, Government dept can quickly become a burden on the economy and weaken it. Macroeconomic policies change credibility of the government and strengthen political institutions. It is very important that our economy has credibility and stability because it’s vital to us Americans long term investment decisionsRead MoreSocial Policy: Definition, Concept, Source, Model Assumptions1440 Words   |  6 PagesSocial Policy The Oxford dictionary defined SP as ‘settled course of action followed and adopted by the government or a political party’. The word policy refers to the particular course of action followed because it happens to be useful for the time being whereas social refers to anything that got to do with the society and its betterment. SP can be defined as a series of public policies designed to promote social development, undertaken by a variety of actors through a range of instruments. Social

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.