Mainstream economics teaches us that market competition is the most efficient way to regulate the production...

Mainstream economics teaches us that market competition is the most efficient way to regulate the production and distribution of commodities. And yet, many who are critical of President Trump’s policies have argued for the government to command enterprises to produce what is needed for this public health emergency and then distribute the goods according to need.

In one paragraph, briefly give me at least two reasons why it might make sense for the government to suspend the market and take control of the production and distribution of goods.

In a second paragraph, explain what problems a government’s command and control policies might cause.

In a final paragraph, tell me whether or not you think the critics of President Trump are correct.

Expert Solution

1} The reasons that make a sense for the government to suspend the market and to take control over the production of commodities is that in a crisis the supply of the most important utilities can't be interrupted at any point of production, supply or distribution. To ensure the continuity and stability in the distribution of these emergency commodities is very important. And also to cease the production in the non essential industries is also important, because it will help to prevent the spread of the virus among the citizens. So to ensure the security of workers is also very important thing involved in the social security of the nation.

2} If the government commands the production and control the prices of the commodity, it will lead to a situation that is a "Regulated market" or "Controlled market". In a controlled market, the firms will lose the ability to regulate the production and distribution of commodities. It will create an unfair competition among the firms. The production of commodity and ascertaining the prices of the commodity will rest upon the government and not the producing firms.

3} I think the critics of President Trump are correct, because in such a crisis the social responsibility towards the life and security of the people are the most important things. In a government controlled, the availability of the commodity will be provided on the basis of the demand generated. And the price hiking can also be limited to a large extend. The social security is a very important part and policy of the government.

Rahul Sunny answered 7 months ago

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