1. How the Government Intervenes
2. How Regulation Has Improved Health and the Environment
3. Examples of When the Free Market Economy Works
4. Disadvantages of the Free Market Economy

There are many advantages to government intervention. For those who support the government intervening in the economy, they define the following benefits:

  • Protecting the safety and health of the public and the environment.
  • Offering consumers increased safety when choosing products.
  • Preventing corporations from taking advantage of innocent consumers.
  • Keeping the country safe with military protection.

How the Government Intervenes

There are many ways the government plays a role in the day-to-day operations of the country. The biggest example is the military, which protects the country from being overrun by other military opponents. To fund this kind of protection, the government collects taxes from citizens, which are used to pay for things like weapons, equipment, and wages.

By hiring and paying members of the military, the government is playing a huge role in the U.S. economy. These military members will spend their wages at businesses near their bases, helping to support small towns. What's more, the military contracts with thousands of businesses across the country for supplies and equipment.

The point of all this is that the military plays a huge role in the economy. If government support of the military vanished, the economy would take a huge hit, devastating nearly everyone across the nation.

Many believe there is even more the government could do to influence the private economy, especially in the field of healthcare. Many economists are in favor of the government-managed Health Insurance Marketplace because it provides tangible benefits to citizens.

How Regulation Has Improved Health and the Environment

There are specific examples on how regulation has kept both the people and the wildlife of the country safe. Two examples of this are the ban on DDT, a compound used to kill insects, and the ban on PCBs, a group of compounds used as cooling fluids in various electrical devices. Both have major effects on human health, so the government banned them in an effort to protect people.

Another regulation that's improved the environment is the Clean Air and Water Acts. These acts forced companies to clean up some of America's most toxic rivers and also set specific air quality standards to improve respiratory health.

The government has also created the Federal Aviation Administration to control air traffic and enforce safety regulations to keep air pollution levels at a minimum and prevent deadly crashes in the air.

Other important regulations protecting the health of the environment include:

  • Stringent regulations on selling coal domestically.
  • Labor and environmental regulations that force companies to work offshore if they want to engage in activities harmful to the environment.
  • A ban on CFCs, which should help prevent the destruction of the ozone layer.

Examples of When the Free Market Economy Works

Those opposed to government intervention instead favor a free market economy. Having a free market economy with minimal government regulation has proven valuable throughout history. One major example is the deregulation of U.S. airlines in 1978. Previously, airfare was expensive because the the government, rather than airlines, set fares and routes. After the deregulation of airlines, new, lost-cost carriers entered the market, leading to customers having more choices and paying lower fares.

Deregulation of other transportation industries, like the trucking and rail industries, has also been invaluable to the economy. This deregulation has allowed vendors to offer lower prices and has increased market competition across the country.

Disadvantages of the Free Market Economy

Of course, not everyone feels this way. Those who oppose free market economies claim the following downsides of government intervention:

  • The competitive environment advocates a "survival of the fittest" atmosphere.
  • Unequal wealth distribution through society, leading to extreme poverty.
  • A lack of economic stability because the economy frequently swings between growth and recession.

There are also times the free market has failed, meaning that it's not the perfect solution many claim it to be. One such instance is the cable industry, which was deregulated in 1996. Without government regulation to keep things in line, cable rates have began to increase steeply in price. In fact, a survey conducted by the U.S. Public Interest Research Group found that there was a 50 percent increase in cable rates between 1996 and 2003.

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