Government Markets and Sustainability - Case Study Example

Every nation contributes maximally to the provision of goods and services that the needs to attain sustainability. Government markets are therefore set up in form of departments or agencies that contribute in purchasing both goods and services which facilitates state’s operations. These markets also allow the provision of essential goods to the citizens such as water, education, security and health care among others. Other benefits provided include good housing and technology. This study show how policies change under the liberal democratic movement in terms of transport and housing. Home ownership has several benefits especially on the American society in that the tax policy also benefits. This ownership does not only benefit an individual but also the entire public and the government. According to Adams and Jeanrenaud (2008) since 2000, ownership of houses doubled in prices since the interest rate policy reduced the cost of borrowing. The other policy introduced showed that every individual to own a house even those who could not afford. There was an assumption that prices would never drop and this resulted to intensifying home ownership. This damaged the financial system resulting to a recession on the global economy. The drop in the economy resulted to a loss of about 15 trillion and many people lost their jobs thus showing the presence of market failure. The government acted through introducing subsidies which tried to push prices up and this made buyers unable to purchase houses. To understand market failure it is important firs to analyse the market and establish its success. This will involve collecting people’s ideas and opinions about the competition in the market and the means of achieving an equal allocation of resources. There are various kinds of principles that apply in housing, transport and Information technology though they vary considerably due to the nature of the products on offer. Pearce (2000) show one include the difficulties that individuals face while servicing a mortgage in U.K for example the Fannie Mae and Freddie Mac companies which have a debt of almost 5 trillion dollars of mortgage which when compared to the GDP which is twice the amount. The two companies aimed at helping every American own a house by making the mortgage market work better. This has been impossible as the deal for the taxpayer was not sustainable to all. Fannie and Freddie had wanted to utilise the difference between the government-guaranteed borrowing costs and the commercial lending income and thus the reason they were growing. The Congress and their regulatory body did not allow this exploitation and so the companies decided to spend more on other equipments such as the lobbying machine. This shows the government encouraging housing speculation as well as living essential services to be provided by the private sector which exploits citizens. This shows the limitations associated with the liberal government in the development of an economy. It shows how most citizens are left in debts where businesses divert the governments system by benefiting themselves. This shows that the role for government is not just respect for property rights or the provision of essential services but is to develop infrastructure. This kind of infrastructure includes supplying professional workers and the provision of decent and universal health care services. This improves efficiency especially to the capitalist government. The government therefore is seen as the best solution that provides economic sustainability as well as solving issues arising. Sustainability is the process where systems set up tend to maintain their diversity and productivity for a long period. According to Blewitt (2008) it shows maintenance of wellbeing due to the provision of better policies for example in a government set up. This study will deal with the economic sustainability that is provided by the government policies stipulated in a liberal democratic state. Sustainability may also mean improving the quality of living of individuals and living within the capacity at which one can be supported. Sustainability is a call to action and therefore a political process for example sustainable global society is represented by respect for nature, human rights, economic justice and political ideologies. Sustainability policies enable the government to set national goals and be capable of measuring progress and thus avoiding market failure (Steven 2007). Market failure is the concept where the goods and services that are allocated in a free market results to inefficiency. Market failure results from individuals self interest where some want to have a bigger share than others and thus inefficiency. The outcome is more likely to occur in non competitive markets or in the distribution of public goods where the government intervenes in the provision of certain goods and services in this case housing services. The problem is corrected using various methods for example using taxes where the government may decide to tax citizen less for mortgage. Subsidies, price controls and bailouts can also be offered. These initiatives are meant to correct market failure and to ensure that resources are equally allocated. Market failure may be caused by one, the power of market agents. These agents block trade causing imperfect competition for instance the market may be dominated by monopoly firms or cartels (Weimer and Aidan 2004). The other cause may be due to externalities which occur in the line of production. One example is if a firm is producing steel, the factors of production involved such as labour and input have to be included in the final price of the product. A market may also fail due to the nature of goods for example public goods. Social disruptions involve war, crime and corruption which divert resources from areas of greater human need, damage the capacity of societies to plan for the future, and generally threaten human well-being and the environment. This has therefore led to the introduction of broad-based strategies for more sustainable social systems which will involve improved education especially in developing countries and a greater regard for social justice where there will be equity between rich and poor as well as intergenerational equity. The natural resources will be maintained to ensure a sustainable living (Adams and Jeanrenaud 2008). The problem of market failure is difficult to solve as the costs of solving may be more than the problem itself. These costs include government failure for instance democratic issues found in a liberal democratic government. Inequality is also regarded as a market failure where essential goods are allocated inefficiently therefore resulting to inefficient outcome. There are many instances that are associated with market failure for instance one may have information that is not spread to the entire nation such as insider trading where people benefit from illegitimate development. The other cases include having too few players in a given market where they have the power of manipulating buyers and using speculations to change prices later. This therefore allows government to intervene in such incidences where it is not appropriate to allow a condition that may result into market failure. Other cases of market failure include free transport offered to some as others bear a disproportionate burden for example in the national defense where soldiers bear a burden which non-soldiers do not. However, the government’s subsidy for national defense is important as it maintains national security and power therefore majority of citizens would not complain about it. It is termed as a public good that should be provided to the soldiers for them to maintain security. The other thing that is deemed a public good includes owner-occupied housing as there is need for encouragement of home ownership which was introduced decades of years ago due to the fiercest stage of the Great Depression. Powerful arguments have also been heard that individuals who awn houses make better citizens and thus contribute to stable communities. This shows that those renting may not have the capacity to contribute to the public good and to the community the same way. Therefore homeowners, homebuilders and mortgage servicers believe in the idea that subsidizing offering housing services is Pareto optimal (DeMartino 2000). To achieve this, the government has to form certain groups where ideas will be proposed on how to deal with the issues facing citizens. They will also create self-reliant communities and introduce simple living conditions in order to maximise self-sufficiency particularly in the housing sector. The policies to be proposed on a broader scale will underpin the concept of a bioregional economy. The other policy will be based around new urbanism which reduces environmental impacts through changing available structures to create and maintain sustainable cities which support sustainable transport. Citizens around this place are said to compact urban neighborhoods and drive fewer miles thus have lower environmental impacts on government policies than those living in sprawling suburbs. The degree of human progress towards achieving sustainability depends on largely on the rate of social movements which influence community choices and the entire environment. One of these movements includes eco-municipalities which also take a systems approach and bases on the policies taken in attaining sustainability. A sustainable human progress will only be achieved through market competition and open communication that offers a comparative advantage. This also improves innovation and efficiency this shows that in order to achieve sustainability, the government should aim at improving markets both locally and internationally (Porritt 2006). The markets will be improved through the use of various kinds of marketing tools and incentives whose outcome is to improve consumption and production. Improving the market outlines seven ways of moving towards a sustainable development. Most businesses are leading on some of these aspects for instance, innovation, eco-efficiency, and stakeholder partnerships. The others include improving market conditions and building of inclusive markets. Imhoff, M et al. (2004, pp. 870-870) emphasises that for this to be achieved, cooperation has to be maintained among government ideologists, businesses, partners and consumers. One of the major ways includes innovation. This applies to both technical and social innovation which tends to improve the way of living. The government handles this through handling the matters arising about exhaustion of resources or environmental degradation in order to satisfy the entire population. The other method includes eco-efficiency where more value is created through concentrating more on opportunities and the quality of the entire economy rather than the quantity of it. To achieve sustainable development, the government should also aim at partnering with other governments in order to share ideas and aspects of development. These ideas should mean to achieve similar goal through open communication, flexibility, compromise and having the same target. Through this method it will be made easier to sole government issues and others affecting a large number of individuals. Once individuals realize that they can be a possibility of gaining more benefits for example according to the policies proposed, then they tend to change their consumption choice which facilitates sustainability. The government however should make sure that the products needed to achieve this are available to sustain the citizens for a long period of time. The other key factor of achieving sustainability involves development of market framework conditions. This looks at the major hindrances of sustainability which includes operating on a monopoly kind of market, corruption in the government set up, and other government policies for instance perverse subsidies and prices which have no economical costs. The policies that promote competition in the market include governments regulations and legislation which includes property rights for instance in the housing sector. The government’s regulations also facilitate accountability, freedom and democracy thus resulting to a cost pricing of all goods and services. DeMartino (2000, p. 70) show to ensure that resources are utilized in the right manner, it is important for the market system to be accurate and have price signals. The environmental costs and other costs involved in the manufacture of goods and services should be known to ensure sustainability. Conclusion Poverty hinders sustainability in the market environment and to avoid this, more opportunities should be created by the government and the existing companies. Individuals should also be able to access the effective markets available and have a better purchasing power. Partnering with other businesses and government also results to sustainability. To improve the housing policies in UK is significant in achieving the goal of good shelter. This is achieved by ensuring that effective systems for management and maintenance are affordable and that all the stakeholders are included in development for example the government, cooperatives and the community based organizations. References Adams, W &Jeanrenaud, S 2008, Transition to sustainability, Towards a humane and diverse world, Switzerland, IUCN, p.108. Blewitt, J 2008, Understanding sustainable development, London, Earthscan. DeMartino, G 2000, Global economy, Global justice, Routledge. p. 70 Imhoff, M et al. 2004, Global patterns in human consumption of net primary production, Nature, pp. 870–873 Pearce, D Barbier, E and Markandya, A 2000, Sustainable development economics and environment in the third world, London. Porritt, J 2006, Capitalism as if the world mattered, London. Steven, G 2007, The hesitant hand, The evolution of the theory of market failure, History of Political Economy, vol. 39, no. 3, pp. 331-358. Weimer, D and Aidan, R 2004, Policy analysis, Concepts and practice, Prentice Hall. Read More