Unit 3 Paper: Final Copy
The United States economy has recently suffered a devastating recession and has been in a recovering state ever since. However, the recovery has been progressing very slowly even with the new government administration under President Barack Obama. It seems that even with all the new government policies passed in attempt to invigorate the economy, the economy is still not in the state it was before the recession. The public expressed their anger towards the government, but I do not believe it is entirely their fault. Big Businesses, such as corporations, that play a huge role in shaping the economy are allowed to freely chase their own objectives in the market instead of cooperating with the government in stabilizing the economy. This is due to the flawed economic regulatory system the government currently has in place, which does not allocate enough power to the government to control the market. I believe that in order to bring the economy back to a stable state, a new and stronger regulatory system must be created.
The current regulatory system employed by the United States government is flawed due to its inability to control what large corporations are doing in the economy, which in result damage small, local businesses. In an article by Brian Shaffer, he discusses the different methods used by businesses in response to government regulation (498). One method utilized by businesses is incorporating the use of political influence on economic legislation passed by the government in order to side step government regulations and gain a competitive edge in the market (498). The government can attempt to pass new economic polices to stabilize the economy, but if these policies aid corporations in gaining an advantage in the market then it will remain unbalanced. This would lead to more economic disparity for local businesses, thus destroying the economy of the communities where they reside.
The government is not regulating the economy in the correct way either. Big businesses are allowed leeway to pursue their own goals because of the weak regulation placed towards them meanwhile small businesses are given the burden of meeting regulatory requirements. This is causing local economies to crumble and weaken. An article on USA Today uses examples such as an local butcher shop shutting down to give us an idea of what regulations are doing to small businesses (Keene). This misuse of regulation will become a significant problem because it will rob the people the opportunity to own their own business. The American dream is crumbling and the future seems dim, as tyrannical corporations will eventually rule the economy if no action is taken.
The solution to this economic problem is simple. The government must construct a stricter and more effective regulatory system if they are to bring the economy back to a stable state. Strict regulations on big businesses must be emphasized so the government can increase its hold on the market. However, Public opinion is against the government enacting more regulation because the misinformed believe that regulations harm the market and hinder economic growth. This is not true. Statistics show that regulation benefits outweigh the cost. An article on EPI.org reports that out of 106 regulations, the benefits created were around 136-651 billion dollars and the costs centered around 44-62 billion dollars annually (Irons and Shapiro). Regulations are a positive force in the economy.
The reason the economy is currently in poor shape is due to deregulation. If you think about it, regulations are just like rules to keep us out of trouble. School rules bring order to a mass of children in classes and allow the faculty to carry out academic learning. This concept applies to regulations and the economy. Regulations allow the economy to operate smoothly and prevent disasters from occurring. The government before the recession believed that corporations could govern themselves and began deregulating the market. Deregulation summed up by a quote “ stripped away key safeguards which could have helped avoid the financial catastrophe” (Irons and Shapiro).
This move by the government allowed the effects of the housing bubble bursting to be more devastating than it should have. The economy fell through and there was no bottom filled with pillows to break its fall.
I believe I have developed the ideal solution to solve this regulatory problem. I will break this into two parts. The first part of the solution is to enact a three-branched regulatory system similar to the checks & balances of the United States government. The branches each will play a role in governing the economy and setting up regulations. The most important branch will create a regulatory code such as the Ten Commandments that affect all businesses and the regulations cannot be broken. This allows the government to draw a line where businesses cannot pass. The second branch of my system concentrates on setting strict regulations specific to only big businesses which will keep them in check and makes sure that while they pursue their own agenda, that they comply with the government’s economic vision. It will still allow businesses the freedom to expand in the market, but prevents their influence on economic legislature to effect the stability of the market overall. The final branch will enact regulations that must be followed by small businesses. These regulations will be more lenient towards them so that it will spurn the growth of small businesses and local economies. Small businesses will comply with these regulations until they have grown to the status of a big business. My solution allows everyone a fair opportunity in the market because not one entity will be dominating the market and government will have stronger hold of the economy so no one business can gain too much of an advantage.
The second part of my two-part solution is to coordinate a system of governance between government regulatory agencies and self-regulatory agencies. The system would allow private self-regulatory agencies to act as an overseer in the market and govern on a small scale. They would be given power to enforce and punish businesses for minor transgressions against the regulatory code. If any major transgressions were made by a business, the self-regulatory agency would make a report to the government because they do not hold the power to punish on a larger scale. The government would review the issue and decide what the just punishment would be for such a transgression. This will allow a clear entity for enforcement to be created, which would save us resources because we will not be deciding who will give out the punishment. The government now can concentrate on major goals instead of wasting time dealing with minor issues.
For every problem there is always multiple answers to solve it. I believe my solution is the best, but I will give examples of others to prove this. An obvious solution I can think of would be to give the government full control of the economy and restore it with their hands. I would argue against this solution because it is a totalitarian approach to economics and it clashes with America’s idea of capitalism. We the people would rather keep our economic rights and solve this issue without such drastic measures. It would also seem skeptical that the American government known for its freedom would be taking it away from its people. One solution that is mouthed by most misinformed people seems to be reverting our economy back to a Laissez-faire system. I would disagree on this choice as mentioned earlier that deregulation was one of the reason why our economy took such a huge blow in the first place. It would lead to more chaos, as the resource abundant corporations would be given the chance to monopolize and dominate the economy without competition. My solution trumps its competition because of its ability to provide fairness in the market while giving strong regulations to act as safeguards for future issues.
Logically my solution has taken a safe and sound approach to this issue since it does not bring a drastic change to the economy because the current system has everything needed to solve this problem, but they are not being utilized in the correct way. Let us reevaluate my solution in Sandelian ethics. Sandel believes that any solution to a problem will fall into one of the three categories of ethics/justices, which are Welfare, Freedom, and Virtue (6). He also believes that if a solution falls into one ethical category then it will clash with at least one of the two other ethical ideas. Sandel uses an example of sacrificing the life of an overweight man to save the lives of workers in the path of a rolling cart (21-22). The concept of giving up individual freedom for the overall good of the society completely describes how my solution works, just not as drastic. I emphasize big businesses must give up a small amount of freedom for the good of the economy. For such a tremendous gain, one must see that the small sacrifice made simply cannot compete with the benefits we would all gain.
I believe my solution can flawlessly solve the economic issue if it were to be utilized. My solution is logical and ethical because the sacrifices made simply does not outweigh all the benefits we can gain. The economy can be brought back to its feet so our nation can continue to prosper for the years to come. We can pass down the idea of the American dream to the future generations.