Question

Write a response in a total of 500 words:

Government interventions into markets can sometimes succeed, but sometimes they make the situation worse. Explore 2 examples of government intervention that did not work. Explain why the intervention made things worse, and what could have been done differently to improve the situation.

Support your analysis by including:

• What the situation was
• What the intervention sought to solve
• What happened
• What might have been done differently

Answer 1

Answer - Government interventions are basically done for improving the situation of market but it fails at some point of time . Price control is most essential for taking care of all the sections of society. Therefore intervention is sometime needed but only in an efficient manner which gives productive consequences. The government intervention in some sectors leads to government failure . Following are the two examples in which government fails :

1) Transport Sector : In transport sector, if government intervenes in controlling pollution caused by vehicles by rising taxes and constructing highways. It will lead to government failure. This is due to the fact that the roads are smooth and vehicles didn't take much time for reaching from one place to another. Consequently, the demand for vehicles increases and the objective to reduce pollution gets distorted. So, the government should plan the situation well for favourable results. Proper planning and strong targets can ensure success. For example, providing boost new technology that will leads to better means which are not conventional for controlling pollution like use of batteries in vehicles. Pollution can also be controlled by formulating rules regarding vehicles like odd even rule. This rule implies one day even number cars run on the road and the next day the turn is for odd number cars. This will definitely helps in controlling pollution.

2) Subsidies to loss incurring industries :

Providing subsidies to loss incurring industries can lead to misleading results. This is due to the fact that the industries which are running in losses incurrs high costs and this will automatically leads to hike in prices and consequently taxes also rises which will ultimately provides losses. Government should find alternatives for these companies so that all parts of the society get benefit like didn't impose taxes on these companies. There are also many alternatives like mergers, amalgamation of companies so that the costs can be cut by producing in large quantities . Ultimately both the companies got benefited and smooth running of companies can be possible.

Government should do the following for increasing efficiency in government departments so that efficient decisions can be taken :

1) Providing incentives to government employees for achieving targets.

2) Rewards and recognition to efficient employees.

3) Strict rules should be formulated so that work can be done efficiently.

4) Project reports should be made from time to time so that the efficiency could be check.

5) Highly qualified economists and managers should be appointed.

6) Motivational programmes should be launched so that employees can work in an efficient manner and also understands the importance of maintaining balanced society.

Conclusion - From above discussion, we conclude that government intervention is necessary but only in efficient manner. Without proper planning and anlytical knowledge, objectives should not be achieved. Motivation and leadership qualities can also help in taking favourable decisions.