Is Government economic intervention a necessity?

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• Mergers and Government Intervention

  The effect of government intervention, taxation, and regulations has a desirable effect on economic behavior. Government intervention takes place when there is necessity to support the economic fabric of the nation.

• Keynesian vs Neoclassical approach on the Economic crises

  A sensitive issue is that whether government intervention is required in certain economic crises like the Great Depression and Auto Industry failure.

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  The classic argument for government intervention is market failure - the inability of the market economy to correct itself from a dysfunctional state (such as the Great Depression).

• Necessity of social regulation

  In other words, while the market may not be completely efficient, the government is even less so. It is true that whenever government is involved, there is a loss in welfare (deadweight loss) resulting from bureaucratic expenses.

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  The point is that so much government intervention in the economy produces disastrous effects. The bailout thing is only a smokescreen to cover up the mistakes of the government. The bailout made the government an economic hero.

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  When the production and sales of goods and services is not efficient without intervention it is termed as market failure. Where there is market failure, there is a demand for government intervention.

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  Another area where government intervention may be requested is the distribution of profits.

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  During this same time, it was a heavy period of intervention. Businesses wanted to forge ahead based on their own plans, without government intervention.

• This posting addresses market efficieny and the government.

  If the government did not intervene, there would be fewer regulations, and would lead to an inefficient market in a structure that makes up a part of economic control. Ethics play a strong role in market efficiency.