90116120 Laissez Faire

(Name) (Institution) (Course) (Date)

Laissez Faire Economy The laissez faire economy is an economy whereby market prices of goods and services are solely determined by the market forces . There is no, minimal, government intervention in the manner at which the prices are deliberated (colander & Landreth, 1994). The proponents of this form of eco nomy, Adam Smith and John Stuart mill saw that if the private businesses were left to work and produce according to their capabilities then more investors would emerge. This would in turn boost economic growth because competition among the private enterprises would encourage innovation needed for a faster and more stable economic growth of a nation. Smith went ahead to show that a rational consumer is one that wants more for himself and less for others. Some American nationalists were in favor of gove rnment control of businesses in order to protect infant industries from in the private sector it is virt ually close to impossible to do that now as the private companies are the real runners of t he economy. On 6 November 2011, Adam Davidson wrote “can anyone really create jobs” (Davidson). In his view politicians have no resources or the abilities to create jobs for t he American population. He explains that companies can only hire if there is high demand for their products with less production capabilities of the available labor force. He goes further and states even the subsidies or tax bre aks that the government offers cannot change the current unemployment rates. On 7 November 2011, the editor of the opinion pages made an observation that the job market is not robust enough to cov er for the current 13.9 million unemployed people. This is a situation where market s are not able to sustain themselves, causing a dilemma of whether the government should intervene and if so to what extent should it do so. Low spending power of the consumers due high rat es of unemployment has brought the American economy to its knees. This country being a capitalistic economy cannot alter this trend in t his new future for the companies are also facing low profit margins. This means that they cannot actually cater for a large number of staff thus increasing the number of the unemployed. This has been made

even more difficult by the fact that congress is in the verge of removing federal unemployment benefits. This would mean that 29 billion spent by approximately 3.5 million Americans who depend on such benefits would be lost (editor). The Obama administration is trying to create jobs through the stimulus plan in an effort to recover from the recent recession. Being a political issue, republicans are not doing anything to help, but are actually trying to make this administration look bad in view of the 2012 elections. The private sector is proving to be lucrative, with high wage rates and benefits as compared to the public sector. This is due to the US policy of laissez faire which has been the American way for a long time has helped the economy to grow at a very stable and high rate to emerge as an economic powerhouse. Economists were not keen in trying to predict future trends or if they were they could not foresee this current recession. In an effort to maintain their status and address the issue of high production costs and profit margins, private companies are increasing the prices of their products and services loading the consumer with all the baggage. High interest rates charged on mortgages are the primary reason why America went into a recession in 2008 and now trying to pick up with no assurance of recovery soon (editor). This unrestricted move by t he federal government has made it possible for these firms to manipulate results in a bid raise their profits.

Works cited

Colander, Harry Landreth and David C. History of Economic Thought. Boston: Houghton Mifflin, 1994. Davidson, Adam. "Can Anyone Really Create Jobs." New York Times, Sunday Magazine 6 november 2011: mm12. print Editor. "The Next Fight Over Jobs." new york edition, new york times 7 november 2011: A24.print