Post on 30-Dec-2015
description
Government and the Economy
David Lee
Public Policy Analysis
12 March 2008
Question
What is the proper role of the Government in the economy?
What policy should it pursue?
Position
The economic interests of a nation are best served when the government limits itself to the protection of: Property Entrepreneurial integrity and freedom
The focus of this paper
Support – Theoretical
Perfect Competition
Inefficiency of Government Intervention
Crowding Out
Support – Empirical
Entrepreneurship and Growth Higher entrepreneurship levels lead to
increasing economic growth rates (Clark, Lee, and Sobel 2007).
Economic freedom Positively correlated to growth
(Campbell and Rogers 2007)
Support - Empirical
Government Limitation Countries with less government involvement have greater
productive entrepreneurial activity. (Clark, Lee, and Sobel 2007)
Small governments that: limit income redistribution, protect property rights and create an open entrepreneurial environment,
do more to promote prosperity than conventional development
models (Campbell and Rogers 2007)
Inefficiency of Special Interests
Arguments for Intervention
Optimal Tariff
Effects on the terms of trade
Promote Domestic Entrepreneurship
Counter Assertions
Resource Combination Limitations
Politicization of the Economy
Strategic Ramifications
Arguments for Intervention
Success of US industrial policy
Special Interest Influence
Counter Arguments
Entrepreneurial Potential Studies show countries that give into demands of
current new businesses have lower levels of entrepreneurship (Clark, Lee, and Sobel 2007).
Inefficiency of Politicization of the Economy
Arguments for Intervention
Entrepreneurship is Disruptive
Established business
Socioeconomically
Counter Arguments
Prosperity
Higher Consumption
Higher Growth
Arguments for Intervention
Economic Freedom is Not Beneficial
Negative relationship between new business formation and commercial lending (Campbell and Rogers 2007).
Counter Arguments
Related Outside Studies
Size of the effect
Economic Freedom Findings
Policy Suggestions
Protection of property
Protection of Entrepreneurial Freedom Limit Special interests influence Business Failure
Works Cited
Campbell, Noel D. and Tammy M. Rogers. “Economic Freedom and Net Business Formation.” Cato Journal 27, No. 1 (2007): 23-36. EBSCOHost. Oregon State University Lib., Corvallis OR <http://www.cato.org/pubs/journal/index.html>.
Clark, J. R., Dwight R. Lee and Russell S. Sobel. “Freedom, barriers to entry, entrepreneurship, and economic progress.” Review of Austrian Economics 20 (2007): 221-36. EconLit. Oregon State University Lib., Corvallis OR. 25 August 2007. <http://www.springer.com>.
Ketels, Christian H. M. “Industrial Policy in the United States.” Journal of Industry, Competition and Trade.7 (2007): 147-167. EconLit. Oregon State University Lib., Corvallis OR. 20 January 2007. <http://www.springer.com>.