Governments Should Limit Their Interference in Market Essay

Excerpt from Essay :

Governments should limit their interference in market progress.

The recent Presidential election was billed as a choice between two visions for America. Unfortunately for voters, there are many other visions that were not presented as viable options. If those options had been presented, voters may have chosen them. One such alternative political philosophy is libertarianism, which makes the case that government should interfere as little as possible in the daily lives of Americans. This is especially true in the economic realm -- whether it is regulation or tax handouts to powerful donor lobbies, the two big parties are equally culpable for creating needles burden that constricts the growth of the American economic engine.

Decentralization of government is a key concept. Manor (1999) notes that there has been a trend towards the decentralization of government worldwide. This trend is occurring because governments realize that decentralization can spur economic growth and alleviate rural poverty by placing more control over resources in the hands of the people.

One of the most significant issues is that governments are inherently prone to corruption. There is little fundamental difference between an official in the developing world asking for a bribe to sign paperwork and an official in Washington writing laws that favor his campaign donors. Corruption lies at the intersection of money and politics. Since politicians have access to and control of critical resources, corruption inevitably colors the governance process, creating barriers to free enterprise (Ehrlich & Lui, 1999).

Qian and Weingast (1997) argue that the state should act to preserve market incentives. This implies that the state should avoid creating regulation that restricts economic success, and should also avoid bailing out failures, as such bailouts skew market signals about behavior. When it is realized that both major political parties are responsible for the 'too big to fail' doctrine, the case for alternate views becomes clearer. Banks no longer have the incentive to manage their money well, and the result is…

Sources Used in Document:

Works Cited:

Ehrlich, I. & Lui, F. (1999) Bureaucratic growth and endogenous economic growth. Journal of Political Economy. Vol. 107 (6) 270-293.

Krueger, A. (1990). Government failures in development. NBER Working Paper #3340. Retrieved November 16, 2012 from

Manor, J. (1999). The political economy of democratic decentralization. The World Bank. Retrieved November 16, 2012 from

Qian, Y. & Weingast, B. (1999). Federalism as a commitment to preserving market incentives. Journal of Economic Perspectives. Vol 11 (4) 83-92.

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