Common Problems Linked with Government Intervention

Government policy is often the object of criticism. For instance, bureaucracies often impose administrative burdens and have a regulatory reflex, implying that the perception that every segment of activity should be regulated in some way endures and impose even more regulations. When policies go wrong, governments excel at avoiding any responsibility or finding indirect culprids. A consequence of many policies is the creation of distortions and misallocations that divert capital into non-productive assets (e.g. more public employees). Corruption can also be an issue with the standard abuse of public power to coerce and confiscate. However, one of the most insidious forms of corruption concerns the relations between governments and politically connected firms that are using these relations to gain advantage at the expense of other firms and the population in general. The relations between large financial firms, central banks and governments is reflective of this form of corruption. There is also an enduring belief that problems can be fixed by an appropriate policy.

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Copyright © 1998-2012, Dr. Jean-Paul Rodrigue, Dept. of Global Studies & Geography, Hofstra University, New York, USA.
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