Friday, April 17, 2009

What are the ways that government interferes in the economy?

I am learning about free markets and I was just wondering if anyone could give me some good examples of why the United States is not a free market.

I know government has large interference in education. But what else is it involved in? Does the government actually bail out companies and individuals?


When it comes to the economy, the government is actually quite involved. We are a free market capitalistic country although the government does interfere when necessary. When the government takes action to alter the economy, it is typically because we are experiencing a recessionary gap or an inflationary gap. When in a recession, the government conducts "expansionary fiscal policy" and in an inflation, "contractionary fiscal policy". (Fiscal policy is the term for government action pertaining to the economy). Expansionary policy is cutting taxes and/or increasing government spending. Contractionary is the opposite. And yes, the government sure does bail out institutions and individuals at crucial times such as now with the housing and mortgage crisis such as secretary treasurey Paulsons mortgage freezing plan and the future tax rebates the president is planning

Embargos, Tariffs, Quotas, Trade Barriers, Fed Rate, Ceilings, Floors, Taxes, Socialist programs, Minimum Wage, Laws prohibiting illegal financial operations, Government Grants, Government Subsidies, Reserve Requirements...

I believe we still have steel tariffs in effect against europe. Also the FED and it's banks are an interference. The taxes (I'm not sure about how much it is absolutly or marginally but this is still interference). The FDIC is an interference. The FDA is an interference. I've heard that cubicles are a result of interference and that Limited Liability Corporation business plans are indirectly subsidized by the gov. Roads, canals, pretty much all infrastructure is gov. interference. Anti-trust laws are an interference, minimum wage, gov. reserves, price ceilings on rent and price ceilings in power production, major protection in favor of doctors, HMOs -another interference. The entire military, nasa, blackwater, Enviromental regulations, affirmative action, most unions are interferences so are child labor laws and one of my biggest pet-peeves community service for high schoolers.

I think the best examples here are blackwater and FED because they are so counter-intuitive.

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