The large economy of a region or a country consists of many small economies and since those small economies are healthy the whole large economy will be healthy. From this aspect, economists in different parts of the world had a debate about government intervention in economies. Some economists believed in the importance and effective role of the government in controlling their economy’s parts from shrinking besides feeling that their businesses are safe from failure and assassination. On the other hand, some economists believe that the government does not have the right to interfere in their economies. This is because they claim that the government would not have an accurate picture of what is going on and they do not know the real needs of their countries. In other words, money would be spent in the wrong way causing surplus or shortage which leads to many problems such as poverty and uneven income distribution.
There are many possible benefits of government intervention in their economies. First, government intervention causes an even income distribution which leads to equality in the social classes and by that equal opportunities. Distribution of income measures how GDP (gross domestic product) is distributed amongst its population by taking the GDP and dividing it by the population. And here comes the role of the government where it can perform projects that can fulfill the needs of its people by serving facilities they need without gaining profits at the same time more job opportunities will appear so even income distribution will be approached. Another way is to help the failed businesses to wake up again so workers will not lose their jobs and keep their income going on. The second benefit is that we can have secured public goods and services. Public goods and services are basic facilities that most people use like street lighting, police, military, education, healthcare, social welfare, and many other similar services. In most countries, people pay in an indirect way for those services in other words people pay taxes. The government intervention supporters believe that these services should be lifted to be managed by the government which means no gained profits in other words these facilities cannot be lifted to private businesses so they will not be turned into commercial projects because they are basic needs and everyone benefits from it. Another benefit is property rights and welfare opportunities. And here we mean that the government has to put rules to conserve property rights. This concept can be summarized in four aspects: the right to use the good, the right to earn income from the good, the right to transfer the good to others, alter it, abandon it, or destroy it (the right to ownership cessation), the right to enforce property rights. Government intervention also plays role in providing welfare opportunities for people with low income. If government did not interfere on this side property rights and welfare opportunities will be lost because the private businesses will seek its benefits and protection ignoring the people’s needs and conditions. If the government controlled its economy from the beginning it will rarely suffer from recessions so it will not spend more to simulate demand or to rescue the banking sector from collapse as what happened in Germany in 2009 according to our case. Another point is when the government interferes in its economy it will help to keep it healthy and running steadily most of the time so more risks can be taken, and projects and investments can be performed. It is not enough to interfere only when uncompetitive or illegal behavior occurs.
A group of economists believe in the concept of free markets and see that governments should not interfere in their economies. The arguments against government intervention can be summarized in three points. First is that they see that government may produce big quantities or products that are against the needs of people which causes surplus and as a result wasting of money without any benefits. It can be a way that the government focuses on producing unneeded things and does not care about the real needs of its people resulting in poverty and other issues. This case can occur when the government does not make a proper and accurate study of the country’s economic situation and define its needs properly. But they claim that every economist would know the needs of his customers and will build up a bossiness according to those needs. The second arguments are about personal freedom where economists will make suitable decision for their businesses regarding the economic situation of the markets. This involves when to increase and decrease prices and supply and other decisions that are related to investment, saving, marketing, and expanding. In their point of view, the government cannot make decisions for every and each economic unit in the country. Another argument is that when the government stays away from controlling economies the inspiration of innovation due to gaining profits will increase. In other words, interpreters will work hard to come up with new creative ideas which are really unique and fulfill the needs of the people this will result in increasing demand and profits at the time. An example of this case is the IKEA company for furniture with space-saving furniture such as sofa beds and bunk beds which can fit small flats and fulfill the needs of customers like sleeping and storing. Economists who prefer free markets believe in their right of gaining profits without the intervention of the government in other words they need their own space.
In conclusion, most countries have government intervention in all aspects, especially economics. It is preferred by most economists to have a government intervention so they can save their businesses and economic rights. Most of the time economists seek government intervention for the purpose of protection of property rights; public goods and services, the national defense system, and price controls.