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Government's Role in Economics - Essay Example
Governments, societies, civilizations, and cultures are largely defined by the distribution of wealth and resources. While the history of man illustrates the need to cooperate in the marketplace and how mankind has depended on the exchange of goods for survival, modern economics has evolved into a paradox of a well planned system of free market enterprise…
The marketplace and the government meet head-on in the division of authority in the creation and distribution of goods, services, and wealth. All economists, except the most conservative capitalists, believe that the government has some role in constructing and guiding the economy. The role of the government in economics is to assure that the economy of the country is able to express its culture and societal will.
Taxation is one of the primary policy functions that a government can use to stimulate or discourage economic activity. Indeed, governments require taxation to provide the necessary funding for needed projects. Ideally, it is hoped that taxation would be fair and all citizens would bear an equal tax burden based on their abilities and needs. However, capitalism has been able to develop concentrated wealth and this unbridled economic freedom has the possibility to create the perception of a shortage of resources. The sixteenth and seventeenth centuries were characterized by food riots as production increased the supply, markets agitated a sense of shortage, and the threat of unfair taxes interjected a sense fear into the system. ...