Do you think it is relevant for the government to go inti production of goods and services? Validate your view
Answers
Answer: Yes it is relevant government to go into production of goods and services
Reasons :
Equality: In a free market, there is likely to be significant inequality and poverty . Governments can intervene to provide a basic security net – unemployment benefit, minimum income for those who are sick and disabled
Public goods: Public goods tend not to be provided in a free market because there is no financial incentive for firms to provide goods that people can enjoy for free. Governments can provide national defence, law and order and pay for it out of general taxation
Education: Merit goods are under-consumed in free-market because people underestimate the personal benefits and/or ignore the external benefits.. Government intervention to provide free education can lead to a significant improvement in the quality of life for people who are educated. There are also many positive externalities to the rest of society .
Shift consumer behaviour: The consumption of demerit goods like alcohol, tobacco and opiates can cause personal costs and significant social costs (e.g. crime).If the government identifies damaging goods, they can slowly change consumer behaviour – such as using higher tax, advertising campaigns and behavioural economics, e.g. making cigarettes difficult to buy with unappealing packets
Environment: The environment is an area with a significant need of government intervention. The free market ignores external costs of business on the environment. It also fails to consider long-term considerations.there needs to be government action to shift behaviour to renewable energy which doesn’t cause these environmental costs. Also, the environment involves many issues where private ownership does not apply.