Is Government Service Needed in Capitalistic Economy?

The world knows United States mainly by its private companies. They have produced products that remain memorable and attractive to foreigners. Even within the United States, most Americans not just work in mainly private companies, but also depend on most goods and services produced by them. Much of its credit goes to capitalism which allows businesses to stay unique and competitive for maximum profit. Interestingly, what is private does not have to have connection to bank account. Many companies have been socially responsible enough to give away scholarships to eligible students to farther their education.

Besides, if we look around we will notice that United States has many world renowned private schools. So in a way, the private sector is doing much more than we have ever imagined. Americans trust them immensely. On the other side of the line, we have the government sector which often becomes the victim of criticism from general public. Some complaints include inability to focus, endless waste and of course, slowness. The only division that still gets honor is defense. But the two wars have already made it look somewhat crippled in the eyes of Americans.

Since last few years, due to economic crisis, there have been multiple debates on how the government is not being efficient. Many think the crisis would push the country towards socialism. Hence, there are urges to see many jobs and even government fields going to private hands. Libertines have religiously wanted the power of the government to shrink. Meanwhile, young people are so used to the services of private companies that they wonder whether there is even a need for the government sector in the matrix of capitalism. It is easy to generalize that there is a need because the government is the only one who can provide national security and maintain foreign relationships. Also a country does need leader. But this is where the public work cannot come to an end. As a matter of fact, within the relationship of private sector and their customers, government plays the most important role. If we look back in the features of capitalism and history of businesses within it we will understand the role even better.

Adams Smith

Going back in the basic, Adam Smith, the man behind the idea of capitalism, did have aversion to government intervention in the economy. Yet he admitted that private businesses did not have the power to provide what an entire city or town needed. We no more live in his time, but what he said remains true even today. Private businesses do take part in social work, but if they embark on taking care of every human in the country, they will end up hurting their profit. In fact, they will not make any of it. This is where government’s role starts. With tax coming from various sources, many different divisions of the government look into providing people goods and services as common as transportation and airports. In general, one of the core features they have is that they are either free or can be used at a very low cost. Consequently, they can be used by those who do not have enough money. Logically, if a country is handed over fully to private hands, such people will not just end up starving, but also become homeless.

Capitalism is generally criticized for the amount of inequality it generates within the society. Even the most successful academic people residing with this system have voiced against it. Previously, we predicted the lives of less fortunate people in a nation controlled by private businesses. Truth to be told, government focused on public service can easily take care of them even when the time is bad. One good example of this is Social Security act during Great depression. It was mainly signed into law to help the needy, but today in amended format, it provides Americans unemployment benefits, disability and old age insurance, and many other welfare programs. Most of them have turned into entitlement. In other words, no matter what happens, when an American citizen is in trouble he will get financial assistance from the government. In the system of capitalism, private businesses cannot make such promises. As mentioned before, this is because they cannot risk their profit and what does not help the business is not a part of their mission. That said, when a businessman ends up being bankrupted and goes down the poverty line he too is given full freedom to take advantage of the entitle programs. In brief, by using redistribution effort, government is able to make sure that the equality is not completely dead in the capitalist system.

As stated earlier, private business are driven by the mission to make profit. When intervention from higher power is absent, this specific objective garnished with greed tends to make even the most successful businesses do enormous mistakes. Eventually, the price gets paid by everyone living in the country and followed by the entire world. Both Great Depression and Recession of 2007 to 2008 clearly highlight this. Generally, to explain both the situations, people blame the Federal Reserve or government for luring businesses to borrow and invest on other projects for double income. We cannot deny the fact that majority of the companies tried to take full advantage of the loans connected to low interest rate. What is often overlooked in this dilemma is their unusual inability to think about the long term consequence. At the end, we saw that their mess was cleaned up by the government. Great depression gave birth to many regulations which made sure that businesses no more went to extreme level to make profit. According to President Roosevelt, the idea was to respect social values because they were more “noble than monetary profit”.  His words indirectly explain the psychology of business owners. When no regulation is in place, they do not mind overriding social values to make profit. In brief, they have a tendency to invite corruption and manipulation.

The worst happens when a company starts to expand and become powerful. Perhaps, Adam Smith did not predict it for which he forgot to give solution about this in his books. History has shown us that big companies use their power to block entry of others willing to do business in their field and even fix prices to destroy stable rivals. This still happens today, but is seen as a crime due to the fact that government has banned it all through Sherman Anti-Trust Act. The punishment of breaking this law is not only breaking down of the company, but also jail time for the executives. So in a way, government is not completely against private businesses. The ultimate truth is that because of such laws small businesses are still alive.

Prosperity in capitalism tends to rely on the amount of demands being fulfilled. Sadly, when not monitored, this can persuade businesses to create wear and tear in the natural resources and environment. Once again, this compels the general public to feel the heat. American dust bowl of the 30’s is the leading example of this. Sure much of it was a natural calamity and no big companies were associated with it, but investigators do not shy away from revealing that inappropriate use of land for farming was one of the reasons behind this dust bowl. The consequence of this was many Americans becoming completely homeless. However, this did force the government to start Natural Resources Conservation Service agency and pass legislature that allowed states to start their own conservation programs. Today they provide information and assistance on water and soil conservation to all including private organizations. Interestingly, after 20 years of making the agency, businesses began taking the idea of corporate social responsibility seriously. The term itself was designed in the 50’s. But the hidden agenda behind this was to influence people to believe that the company practicing it was moralistic and hence, it needed help in maximization of profit. Overall, corporate social responsibility is mere an act. It does not have connection to compassion for the planet and lives.

In summary, capitalism cannot sustain long without the aid of higher power which in this case is either the state or federal government. Also businesses tend to be artificial about morals and they tend to make mistakes which end up hurting the general public.  Business administration major is not new. Professionals in the corporate world hold immense degrees and success.  But these factors are not powerful enough to keep corporate crimes and the mistakes away. One mainstream unofficial statement holds that the most educated people tend to be most corrupted. In the corporate world, Martha Stewart, Enron executives and many others proved this to be true. Many of their crimes had nothing to do with the Great Depression and recession of 2007 and 2008. Corruption done in the corporate world gets caught almost every year. Under such circumstances, it would be completely wrong to think that government size must be shrunk and public jobs should go to private farms. Also thinking that help of government equals to heading towards socialism is meaningless, for the term’s basic meaning is that government owns everything and takes decision on the lives of people.

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