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This paper gives an analysis of the role of the state in the economy considering key issues such as interest rate setting, redistribution of wealth, provision of public goods and regulation. The paper acknowledges a range of arguments and theoretical perspectives including Adam Smith's free market concepts and those who support more interntional government policies. The final conclusion of this paper is that in future years the role of the state will be a prominent one, however it will be one which works with rather than against the current system of free market economics.
From the Paper:"Other criticisms of the role of the state in the run up to the financial crisis may relate to fiscal policy and the management of revenues generated by the city in the lead up to the financial crisis. While the banking sector and the city has been blamed in many ways for the creation of the financial crisis, one criticism that may be made of the state is an overreliance upon the sector to fund high levels of government spending in the run up to the crisis. Critics of government policy may indicate that while the government continued to increase national spending in the run up to the financial crisis, a phenomenon allowed only by the generation of wealth in the financial services sector. The state should have in effect have been using the wealth to save for times when such money would be required to stimulate the economy such as at present, rather than funding ever higher levels of government spending. As such, this may be seen as one of the key economic failings of the state in that revenues generated from taxation, much of which came from the financial services sector were miss-spent and have lead to the current situation where government spending is now having to be cut at a time when economic stimulus may be at its greatest need."
Sample of Sources Used:
- BBC News. 2011. Geithner: UK light touch regulation "deeply costly" Available online at: http://www.bbc.co.uk/news/business-12535837 [Accessed on 12/12/11].
- BBC News. 2008. US Bail-out plans provoke doubt. Available online at: http://news.bbc.co.uk/1/hi/business/7629823.stm [Accessed on 12/12/11].
- BBC News. 2004. NHS is wasteful and inefficient. Available online at: http://news.bbc.co.uk/1/hi/health/3755438.stm [Accessed on 12/12/11].
- Begg, D, Fischer, S, Dornbusch, R. 2008. Economics. 9th ed. London: McGraw-Hill.
- BoE. 2010. Bank of England maintains bank rate at 0.5% and the size of the asset purchase program at L200 billion. Available online at: http://www.bankofengland.co.uk/publications/news/2010/084.htm [Accessed on 20/11/11].
Cite this Research Paper:
The Role of the State in Economic Development and Management (2012, April 29) Retrieved December 06, 2022, from https://www.academon.com/research-paper/the-role-of-the-state-in-economic-development-and-management-150849/
"The Role of the State in Economic Development and Management" 29 April 2012. Web. 06 December. 2022. <https://www.academon.com/research-paper/the-role-of-the-state-in-economic-development-and-management-150849/>