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Government and the Economy

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The economic interests of a nation are best served when the government limits ... Campbell, Noel D. and Tammy M. Rogers. ' Economic Freedom and Net Business Formation. ... – PowerPoint PPT presentation

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Title: Government and the Economy


1
Government and the Economy
  • David Lee
  • Public Policy Analysis
  • 12 March 2008

2
Question
  • What is the proper role of the Government in the
    economy?
  • What policy should it pursue?

3
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

4
Support Theoretical
  • Perfect Competition
  • Inefficiency of Government Intervention
  • Crowding Out

5
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)

6
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

7
Arguments for Intervention
  • Optimal Tariff
  • Effects on the terms of trade
  • Promote Domestic Entrepreneurship

8
Counter Assertions
  • Resource Combination Limitations
  • Politicization of the Economy
  • Strategic Ramifications

9
Arguments for Intervention
  • Success of US industrial policy
  • Special Interest Influence

10
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

11
Arguments for Intervention
  • Entrepreneurship is Disruptive
  • Established business
  • Socioeconomically

12
Counter Arguments
  • Prosperity
  • Higher Consumption
  • Higher Growth

13
Arguments for Intervention
  • Economic Freedom is Not Beneficial
  • Negative relationship between new business
    formation and commercial lending (Campbell and
    Rogers 2007).

14
Counter Arguments
  • Related Outside Studies
  • Size of the effect
  • Economic Freedom Findings

15
Policy Suggestions
  • Protection of property
  • Protection of Entrepreneurial Freedom
  • Limit Special interests influence
  • Business Failure

16
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
    lthttp//www.cato.org/pubs/journal/index.htmlgt.
  • 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. lthttp//www.springer.comgt.
  • 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. lthttp//www.springer.comgt.
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