ECON 208 Chapter Notes - Chapter 16: Paternalism, Planned Economy, Market Power

• School: McGill University
• Department: Economics (Arts)
• Course: ECON 208
• Professor: Mayssun El- Attar Vilalta

Document Summary

Govts necessary to provide law and order and define and enforce property rights. The operative choice is not between an unhampered free-market economy and a fully centralized command economy. It is rather the choice of which mix of markets and government intervention best suits people"s hopes and needs. So need to keep the govt"s monopoly directed to the general good rather than to the good of a narrow govt circle importance of having checks on the govt"s arbitrary use of its monopoly (dictators misuse power) When the govt"s monopoly of violence is secure and functions with effective restrictions against its arbitrary use, citizens can safely carry on their ordinary economic and social activities. Govt activity: provide security of property; govt defines/enforces property rights to give ppl secure claim. Local corruption, powerful warlords, lack of basic political infrastructure combine to make official development aid less effective than it would be in countries w/ more stable and representative political structures.