MyExpectations of the Government
Manypeople dislike the impact of government on their lives, whie othersembrace it. Yet it is difficult for societies and economies tofunction without some form of government. Few people like the factthat the government has to deduct a significant part of their incomeas contribution to taxes or limiting their freedom of choice amongothers. On the other hand, governance which is good provideinvaluable services that other entities cannot easily offer. Some ofthe critical services offered by the governments include defenseagainst foreign predation, sound judgment of disputes, protectingindividual rights such as the right to life, as well as offeringprotection to individual and state properties (Fishback 9).
Unfortunately,history is replete with government which only enrich a handful ofpowerful elites , and this is done at the expense of the vastmajority. As a result, such kind of governments acts as a stumblingblock to development, as innovation is highly hindered, thus lowemployment levels, increased cases of corruption among other vices. Bad governance has been so common that some scholars recentlyreferred to them as the “Natural state” (p.10). Yet relatively asmall number of countries have succeeded in developing governmentsthat allow a majority of their people to access enough economicfreedom that promotes economic growth and development. Very few haveempowered the masses to economic freedom. This perspectiveautomatically raises the question what should be our expectations ofgovernment?
Thegovernment possess a critical role of ensuring that the societyfunctions in a peaceful and productive way. Peace must be accompaniedwithout a commensurate state of economic and social prosperity.Government, at all levels, is given the responsibility to protectindividual economic and political freedoms. In executing this vitalresponsibility, the government has to ensure a smooth power transferfrom one administration to another, so that new ideas can set in todevelop the country. The legal environment has to encourage bothforeign and domestic investments so that citizens can individuallyprosper through innovation and entrepreneurship. A free enterpriseeconomy encourages individuals to compete among themselves so thatmarket mechanisms can regulate the market. Market competitionautomatically lowers the general price of goods and services in theeconomy to the benefit of the consumer. The duty of the governmentrole should be to offer legal environment which safeguards theinterest’s citizens such as high standards of production, faircompetition, and business ethics (Weingast 15). However, thegovernment should not leave the market entirely in the hands ofcapitalist investors.
Citizensexpect the government to use prudent prediction mechanisms thatprevent market instabilities. Private investors must have limitsbeyond which they cannot do business. In an attempt to maximizeprofits, business enterprises can make decisions that end updestroying the very market they operate in. An example is the recentcredit crunch. Governments failed to play their critical regulatoryrole and left the housing credit market entirely in the hands ofprivate investors and mortgage companies. As a result, there washaphazard lending in anticipation of more returns in then boominghousing market (p. 23). Governments failed to regulate excessivelending without the support of worthwhile collateral. When it wastime to repay the mortgage loans, the borrowing firms could not do sobecause the economy had shrunk. Lenders could not repossesssubstantial collateral from borrowers because they were notadequately vetted at the time of borrowing. A credit crunch ensuedand shock waves ran across the world plunging it in an economiccrisis that it is struggling to come out to date.
Citizensexpect the government to flexible. The society is rapidly changingdue to the movement of people and the rise in technologicaladvancements. It would be naïve for a government to keep usingpolicies that were relevant to a particular time period. Despite theforces that lead to inertia, citizens expect their government to haveand show the ability of correcting mistakes. It is clear thatgoverning is often a tedious process. In most cases, voters disagreewith the best policies as well as competing theories of governmentpossessed by experts. This often results in conflicting answers.Further, social and technological changes turn policies which wereonce helpful to become absolute hence the need to develop others, orstrengthen them. In a setting involving diverse resources, federalstructures as established in the constitution enable the governmentto have a raised degree of latitude in experimenting variouspolicies.Thegovernment should, therefore, take advantage of this and be able torespond to socioeconomic change.
Ofall the economic institutions, government is the most unique due tothe fact that, it is the only institution put in place by the entirepopulation. The people have given it the coercive power to forcepeople to take certain actions. Citizens expect the government toresponsibly use these powers to promote the economic welfare of themany or of the few. To do so, the government has to developinstitutions that limit its governmental power by means of a set ofinternal checks which enable it to write and enforce a set of rules(including those that regulate its own behavior). In moderneconomies, the government is supposed to interact with other playersin the economy on a contractual basis. Operating in a contractualstate accords government powers to play roles such as:
Enforceand protect property rights. It is notable that, protection ofproperty rights goes beyond land rights, as they include the rightsto control one’s own person as well as decisions, control over suchproperty like automobiles among others. Thus, governments ought todevelop laws safeguarding these kind of rights. Provide freedom tocontract and “Regular Administration of Justice” – Citizensexpect the government to allow them make binding commitments withoutits interference. Such commitments are important in making long-termarrangements in which one side or other might seek to back out of theagreement when conditions change. If the government does not providesuch an environment, many projects in which the at least one side hasto make up-front investments and stay the course to reap substantialfuture benefits could not be agreed on. The government should use itspowers to establish regulations in the “public interest” thatimpose limits on behavior and contracts. Adam Smith articulated thisfact quite well when he said, “Economies will seldom flourish instates that do not enjoy a regular administration of justice or acertain degree of confidence in the justice of the government (Porter19).
Marketplayers and citizens expect the government to be the final arbiter incase of market failure. Market scan fail to allocate goods andservices efficiently in several situations. Market economies such asCanada have common law courts that adjudicate disputes. Sometimesthis combination is inefficient when information is expensive,negotiation costs are high, or there are externalities. Externalities occur when the decisions one person or group of peoplecause damage to other people (Downs263).Furthermore, market firms tend to develop in some industriesresulting into a monopoly arising from economies of scale. Thegovernment has the capacity to resolve these issues. Whereinformation costs are high, the government may be bale to forcesellers to reveal information about their products or set a basicstandard that all sellers must meet. Negotiation costs areparticularly problematic for externalities involving large numbers ofpeople. In developing a solution, the government can cut negotiationcosts by acting as a representative of the people that would finallybe affected by high negotiation costs (p. 264). Through anti-trustactivity, the government may be able to prevent ant-competitivebehavior that harms consumers.
Themost obvious influence that each person has over the government stemsfrom their right to vote. Voting gives each citizen some say in thepolitical process, yet many fail to exercise this right to its fullextent. Each person represents a small share of the electorate thatit is extraordinarily unlikely that his or her vote will be decisivein an election. Furthermore, candidates establish their positions insuch ways as to attract enough voters to win, so the differencebetween candidates is not often large. Therefore, the expectations ofcitizens for government are valid as long as they contribute in itsexistence and composition.
Downs,Anthony. "An economic theory of democracy." (2007):260-276.
Fishback,Price V. M. Governmentand the American Economy: A New History.Chicago: University of Chicago Press, 2007. Internet resource.
Porter,Michael E. "Location, competition, and economic development:Local clusters in a global economy." Economicdevelopment quarterly14.1 (2011): 15-34.
Weingast,Barry R. "The economic role of political institutions:market-preserving federalism and economic development." Journalof Law, Economics, & Organization(2012): 1-31.