The economy is an issue that plays a role in every Americans life. But what is it exactly? In short, it is all of the combined wealth and resources of a country, in terms of the production and consumption of goods and services.
Economics extend to all resources – belongings, time, and even your smartphone’s data. Economic policy can be summed up in one question: resources are scarce, so how can society best distribute them?
When politicians propose new ideas such as creating more jobs, or changing how involved the government is in the operation of the economy, what they’re really doing is proposing ways to best allocate our country’s resources to Americans.
The government helps manage the economy in two ways: monetary policy and fiscal policy. Through monetary policy, the government regulates the money supply and interest rates via the Federal Reserve. Through fiscal policy, the government uses its power to tax and spend citizens and businesses.
Should the government be involved in how the economy is run?
Proponents of government intervention believe that the government should plan most aspects of the economy. A central planner can decrease inequality, help avoid economic depressions like the Great Depression of the 1930’s, and lower unemployment by evaluating what the country needs the most. They believe that the government should increase their debt to offset the negative effects of capitalism to ensure that all citizens have adequate access to education, healthcare, and other important resources.
Opponents to government intervention believe that resources are best distributed when society is left alone to peacefully trade amongst itself. When the government intervenes to fix the economy, it often makes the problem worse than if people were left to fix the problem themselves. Opponents to government intervention in the economy say that the government is too influenced by political groups and agendas, and won’t take the average citizen’s needs into account.