Government Intervention In The Economy

Recently, there has been a debate as to whether government intervention is necessary in order to preserve and regulate economic changes within an economy. In the source, Ronald Reagan states that “the problem is not that people are taxed too little, the problem is that government spends too much.” Through this source, it is evident that Reagan in an advocate of supply-side economics as he believes in the natural regulation of the economy through demand and production. Furthermore, he is not in favor of government intervention of the economy as he believes that during times of economic recessions “the government spends too much.” As a supporter of supply-side economics, Reagan strongly believes that taxation should be dramatically reduced for
By increasing government intervention in the economy, poverty rates will be dramatically reduced as employment rates consequently increase due to the implementation of public social, work programs. For example, during the years of the Great Depression following the stock market crash in 1929, widespread economic destruction ensued throughout the entire world. This was especially apparent in the US when laissez-faire economics was supported. It was ostensible that because of the lack of social programs and funding, many people were living below the poverty line due the lack of regulation of inflation, causing citizens to be unable to afford their basic necessities. However, this predicament began to gradually resolve itself after President Roosevelt replaced Hoover and came into power. During Roosevelt’s reign, he greatly recognized the role government needed to play in order to establish a secure, stable economy that did not constantly undergo the “boom and bust” cycle. For instance, Roosevelt established the Civilian Conservation Corp in which the government provided jobs for young people to earn a living. These jobs often included planting forests, improving rivers and other environmentally related occupations. Other social welfare programs that Roosevelt established included the Emergency Banking Act, the National Recovery Administration
By taxing more to the wealthier people, this will reduce the burden of taxation on the lower-income earners since they will consequently be required to pay fewer taxes. Effects of the regulation of taxation are demonstrated in the United States. When Bush reigned control of the US economy, he implemented tax cuts towards US citizens; as a result of this action, economic growth slowed as the average annual growth in gross domestic product (GDP) decreased to a low 2.6%. In contrast, during the 1990s with increased government intervention in the economy, the average GDP was 3.8%. The major discrepancy from the 1990s into the early 2000s illustrates that low GDP results from the increased concentration of wealth in the upper class. Even though advocates of supply-side economics state that wealth will naturally trickle down into the working class, this does not actually correlate with the statistics illustrated above. Rather, through trickle-down economics, the wealthier become even wealthier as the poor continue to become even more poorer. Canada uses a system of progressive taxation in which the individuals are taxed according to their income and wealth. During the early 200s, the Gini coefficient gave Canada 0.440 for its wealth disparity with 0 corresponding to perfect equality