Why the American Government Gets Involved in the Economy

Preserving Economic Freedoms- When the nation as a whole feels that certain products have devastating consequences on our safety and health this is when the government steps in and takes action.

A. Consumer Protection- In today's society the United States government is the protector of consumers. In this day in age the government intervenes in the marketplace to help guard public health by setting manufacturing standards; conducting laboratory tests on food, medicines, and other products. They also provide consumer information on these products such as milk, which must have an expiration date and must be handled in sanitary conditions.

B. Worker Health and Safety- The Occupational Safety and Health Administration which was created in 1970 sets strict regulations on workplace safety, conducts workplace inspections, and requires public disclosure of hazards to workers. Under these guidelines workers have the right to know what is hazardous about the conditions that they work in.

C. Environmental Protection- Until recently the government stayed out of the way of businesses when it came to environmental pollution. They would let these companies pollute the air, water, and land, in 1970 due to the pressure from the increasing environmental movement president Nixon started the Environmental Protection Agency. The EPA puts regulations and laws on industries that hurt the environment so that will not have such an impact such as the logging industry and the mining industry.

Providing a Safety Net- When businesses pack up and disappear cities and towns need a back up plan on how they can raise tax dollars to keep the public services going and how to support those who cannot support themselves do to lost opportunities.

A. The Welfare System- The welfare system collects tax's from individuals and redistributes some of those funds in the form of welfare. Welfare started following the great depression. It was used to help the poor get off there feet and survive. The concern about welfare since then Is that people are afraid that some will become dependent off of it and will not try to get off of it.

B. Cash Transfers- In this program the government provides direct payments of money to the poor, disabled, and retired people.

1) Temporary Assistance for Needy Families- This program stops direct federal welfare to those in need and instead sends it to the different states. Those states must adhere to specific guidelines but use the money in their own welfare system. The reform is aimed to help people move from being dependent on welfare to the workforce.

2) Social Security- Social security gives a direct money transfer to the retired. This pays for their bills and living expenses. The money comes from collecting payroll taxes which intern redistributes that money to the current recipient.

3) Unemployment Insurance- This program provides money to eligible workers who have lost their jobs. Workers must show that they have made an effort to find work during the week that were paid.

4) Workers Compensation- This program provides money to workers who have been injured on the job. This insurance has become more expensive due to the rise in reported injuries.

C. In-Kind Benefits- This program provides the poor with goods and services for free or a greatly reduced fee. This program includes thongs such as food stamps, food giveaways, subsidized housing, and legal aid.

D. Medical Benefits- The U.S. government provides health insurance to the elderly, disabled and the poor. This is a program for those who are not covered by their employers insurance policy or if they cannot afford it.

E. Education- The government funds programs for schooling from preschool to college. This helps increase the over all productivity of those in the community making the economy that much stronger.
Providing Public Goods- There are certain things that the government must provide us wit or we would not be able to grow as a society. If the government did not pay for roads then individuals would have to pay for them, which is extremely expensive. Then some would not allow you to travel across those roads or you might have to pay a toll.

A. Free Rider Problem- A free rider is someone who would not choose to pay for a certain good or service, but would get the benefits of it anyway if it were provided as a public good. For example you may not pay for a new freeway near your house but after it was built you would use it anyway. The government steps in and decides what to use you tax dollars for and what is most important.

B. Externality- It is when the economic side effect of a good or service that generates benefits or costs to someone other that the person deciding how much to produce or consume. This can have great or horrible effects on the economy depending on how it is used. The creation of a lake creates swimming, boating, fishing, and lake front views, which are all good externalities. But it also brings negative ones like loss of wildlife in their habitat, disruption of fish migration, and pollution from motorboats.

Promoting Growth and Stability- The United States government wants our economy of 273 million to keep growing and not shrink. When the economy is at its best the policy makers in Washington try to take control of the economy but when its at its worst the policy makers try to kick start it up and get it going.

A. Employment- One aim of the federal economic policy is to provide jobs for all of those who are able to work. Policy makers are trying to keep unemployment down to around 4.5 percent of the country.

B. Growth- With each generation comes the new task of raising the bar for living standards. Each generation is trying to raise the standard of living for the next generation by selling and buying more goods and services.

C. Stability- One of the biggest goals of the economy is to keep it safe and stable. Stability gives consumers, producers, and investor's confidence in the economy and in our financial institutions, promoting economic freedom and growth.

D. Technological Progress- Technology helps push the economy forward and its society by increases the amount of goods and services that they can produce.

Our Economy over all plays a huge rolls in our everyday lives and the economy that we live in. If we did not have the program that are in place in our government today our economy would be in chaos and would never succeed.