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Government Intervention

Government Intervention. Government Involvement in the Economy. What is the appropriate level of government involvement ? Should government involvement be scaled-back with more emphasis on privatization and de-regulation ?

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Government Intervention

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  1. Government Intervention

  2. Government Involvement in the Economy • What is the appropriate level of government involvement? • Should government involvement be scaled-back with more emphasis on privatization and de-regulation? • Should government involvement be reduced and/or restricted to specific areas? • Can the goal of common good be achieved in an economy driven by individual self-interest? • In times of economic downturns, can the economy correct itself without government involvement?

  3. The Great Depression • An economic depression is defined as a long and harsh period of reduced real output. • The Great Depression was a time period during the 1930s, when true to its name, caused great suffering and hardship to Canadians and our major trading partners; production dropped, businesses failed, the stock market crashed, and unemployment levels spiked. • Up to this point, the economy had been able to make the necessary self-corrections, however this situation was so serious on so many different levels: declining prices levels, low levels of national production, and high unemployment that it became evident that drastic measures were needed to help the economy to recover. • John Maynard Keynes was one of the first economists to propose that governments increase government spending to get people back to work on public projects. Despite intense opposition to his views, governments slowly adopted his theories and the outcome was successful.

  4. Canada’s Social Welfare Safety Net • Until the Great Depression, Canada did not have a welfare system, which meant that governments could not help residents facing financial hardship. • Between the 1930s and the 1970s the role of government expanded so dramatically that Canada became a welfare state. • A welfare state means that the government plays a major role in ensuring the economic well-being of its citizens.  • This is very different to the previous laissez-faire capitalistic approach to decision making. As a result of becoming a welfare state, the government implemented a number of social programs.:

  5. Social Welfare Programs • Medicare • Publicly funded education • Canada Pension Plan (CPP) • Old Age Security • Family Allowance • Unemployment Insurance

  6. Political Perspectives • A right-wing view is considered to be more conservative or traditional with a preference for the laissez-faire capitalist approach meaning less government involvement. • government involvement is viewed as an intrusion that is usually inefficient and there is a belief that the more people expect from the government the more dependent they will become. • A left-wing view is more liberal minded with a preference for more government involvement especially when it concerns the needs of people who are unable to care for themselves.

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