Economic interventionism

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Economic interventionism (also economic planning and central planning) is a common term used to describe any activity, beyond the basic regulation of fraud and enforcement o'f contracts, undertaken by a government in an effort to affect a country's economy. Economic invervention is aimed at a variety of political objectives, such as increasing economic growth, increasing employment, raising wages, raising or reducing prices, promoting equality, or addressing supposed market failures.

Economic interventionism is generally a feature of governments run by social democratic and progressive parties, which believe that certain market outcomes are undesirable and ought to be mitigated. Economic intervention is also used, albeit less often, by conservatives in many parts of the world in an attempt to mitigate free market effects that they see as opposed to their traditions, social order, or state authority.

[edit] Types of interventions

Economic interventions common in modern governments include targeted taxes, targeted tax credits, minimum wage laws, union shop rules, contracting preferences, direct subsidies to certain classes of producers, price supports, price caps, production quotas, import quotas, and tariffs.

[edit] Effects of Interventionism

The effects of any given intervention are often quite contentious, and are often hard to discern, as it is difficult to separate the effects of an intervention from confounding factors. Libertarians and conservatives generally claim that the overall effects of an intervention reduce the overall size of the economy, but that since the benefits are usually felt strongly by a small class of people while the costs are spread lightly over the entire population, which creates a political imbalance in favor of the intervention. Social democrats and progressives often claim that certain interventions can increase the overall size of the economy. Claims that a correlation between economic interventions and wealth of a country show this are disputed by conservatives who claim that wealthier countries can afford more interventions without causing significant economic damage.