Question

Argue for one side of the continuum between Laissez Faire and Regulation. In your essay, discuss at least 2 systems/theories that belong to each side (2 for one side and 2 for the other) and critique or defend them according to which side you think is the ‘most fitting’ for businesses to follow. In your essay, you must touch upon (make a comment, even if just a minor point) at least two of the following case studies: Ford and the Exploding Pintos, Walmart’s Predatory Pricing, The Trolly Problem, The Dr. and the Five Vials, Microsoft’s Word Monopoly, or Drug Testing on the Homeless Alcoholics (or any other case study that you wish to use). 300 words

Answer 1

The French word 'Laissez Faire' means let alone. The laissez faire policy is the policy which states that the economy should be free from any kind of interference by the government. The equilibrium level in the economy will be established by the market forces of demand and supply. The government should not interfere in economic matters. The 'Laissez Faire Policy was propounded by the classical economists like Adam Smith, J.B. Say, J.S. Mill, Pigou, Marshall and others.

Regulation means the government regulates the economy. Keynesian economists have attached great importance to regulation in the economic sphere. Government intervention is inevitable to make up for the deficiency of private investment. The government is a kind of balancing factor. It is not to supplant private enterprise but to supplement it. The government plays an important role in increasing the propensity to consume by distributing wealth equitably. By lowering the rate of interest, the government encourages the entrepreneurs to increase investment.

One theory arguing for Laissez Faire is the Classical Theory of Employment and that arguing for Regulation is the Keynesian Theory of Employment. Write in essay in detail their views on respective policies and how economy is impacted.  Keynesian economists criticized the Laissez-Faire policy as according to them the intervention of government is necessary for equilibrium in the economy. And Classical economists viewed the role of government as to maintain law and order in the economy only.

However, the role of the government as a regulator of the economy as well as the facilitator of investment in the economy is inevitable so as to maintain equilibrium in the economy. Talking about the United States, the economy operates freely without government intervention. Write your views on this.

Comment on atleast two case studies:

Ford and The Exploding Pintos: Ford Pinto was a subcompact car suffering from fuel tank inefficiencies.

Walmart's Predatory Pricing: Predatory pricing strategy is one in which the large firms or companies cut down prices below cost to eliminate competitors from the market.