POSC150 Lecture Notes - Lecture 19: Invisible Hand, Economic Freedom, Human Nature
2 Apr 2018
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Document Summary
Market mechanisms ensure an efficient and productive economy so long as there is no outside interference/manipulation. I. e. allow our self-interests and the invisible hand to operate without interference. Government should function as an umpire enforcing the rules of the economic game. Leads to inefficiencies and misallocation of resources. Government subsidies may prevent an industry from dying out when it probably should have. Tax breaks/tariffs may give industries an unfair advantage over competition. Social welfare undermines the initiative and self-reliance that makes capitalism work. Without the threat of pain (poverty), there is no incentive to work. With no incentive to work and make a profit, the entire theory breaks down. However this does not mean that conservatives do not care about the poor. They just don"t want the government to force people to pay for welfare. They also believe that if you are dependent upon government for your survival - you are not really free.
