The Role of State in Modern Democracies - Coursework Example

Name Course Tutor Date Introduction The role of the state in modern democracies has expanded radically over the past century. Compared to its pre 20th century roles, the state has taken on vast and new roles, including provision of health care, infrastructures and several other programs that usually comprise a contemporary welfare state. The traditional state was mainly concerned with administration of law and order, provision of natural defense, and several public goods like transportation and applied and basic education. However, the role of the state has expanded because modern society needs wealth redistribution, and regulation and stability of the free market economy (Bryce, 95). The free market economy The free market’s move towards the social and economic policy has indefinite connection with the state. The economic reforms endorsed in nations like North America and Canada over the last two decades such as privatization of public or state services and assets and deregulation of environmental and labour laws, have been formulated with the aim ensuring that the state has no powers over the national economy or at least confining it to have a minimal role. In regard to the free market economy, the states do not have the management ability or legitimate power to run the economy. Birch argues that, ownership of industries by the state, state planning, state initiated welfare and social programs and state control of economic policy should be avoided since they demoralize entrepreneurial activity, lessen individual liberties and result to ineffective utilization of resources (Smelser, & Swedberg, 452). Crown corporations are wholly owned by provincial or federal governments but are structured like independent or private enterprises. Crown Corporations were established so as to carry out regulatory, administrative and financial services but they also provide services and goods to the society. Privatization of crown corporations resulted in the transfer of control and ownership of services provided by these corporations to private enterprises. Through privatization, states are able to liberate resources and permit free markets to influence the distribution of economic resources. Privatization is significant because of the efficiency benefits that emerge as a result of transfer of regulation of private services or publicly operated and owned enterprises to private sector. For example, private enterprises have incentives that are different from those influencing government sector bureaucrats. Clarke argues that while private management is concerned with profit maximization so as to stay in business, government entities are not concerned with profitable operations because they operate in accordance to the aspirations of their bottom line political masters. Indeed, government-operated enterprises and services are given subsidies and grants by the state if they are not able to support themselves (11). While private enterprises are faced with competition when delivering particular services and goods, government services and enterprises maintain control over their functioning. As a result, there are no incentives for government sector bureaucrats to promote the superiority of services they deliver. Private enterprises must continuously provide and innovate quality services and goods at sensible prices to their customers so as to stay competitive and remain in business. Government owned enterprises utilize capital far less effectively than private enterprises in a similar industry. Given the rigidity of place of work rules in government sector, public enterprises are deterred from their capability to test and innovate new systems of production (Hemming, & Mansoor, 20). The Canadian health care should also be privatized. The feature of universal health system and care funded by the Canadian government entails public provision of hospital and core physician services. However, the public health sector is not offering efficient service delivery and the government should focus on privatization of health care. This should be done through calling for a greater role of the private health sector in offering medical services, through enlarging private insurance scope, permitting patients to directly purchase particular medical essential services, and allowing medical professionals to simultaneously work in both the private and public systems. This will ensure that the governmental health care scheme is being supported and private sector encouraged if the public scheme is unable to meet medical needs of the citizens. This also implies that people will be able to access timely medical care on the basis of need and not on their capability to pay for it. Redirection of state power and spending The redirection of state spending and power has also entailed deregulation, reallocation of subsidies, and polling of state sovereignty so as to create novel trading blocs. According to Eliasson, (176), market competition is meant to identify and serve the public interest via the market, whereby people are able to express their choices. Competition is enhanced through deregulation which refers to simplification or removal of government regulations and rules that restrain the running of the market forces. The simpler and fewer regulations result to increased degree of competitiveness, thus increased productivity, efficiency business operations and reduced prices of goods and services. Government invention in market system has several disadvantages in the economic status of a country. Government procedures are usually cumbersome and this results to inefficiencies in market system. For instance, marketing boards spend a lot of money and time holding meetings on economic issues that can delay decisions in the market scheme. Restrictions on free movement of capital among nations have been eliminated via worldwide agreements like the general agreement on tariffs and trade. According to Baehr, (410), democratic states have sought to draw private investment to their nations through establishing a conducive policy setting for business. Many environmental and social controls that may daunt business or add costs have been eradicated. Through the Britain national economic policy, the government has eradicated regulations that made the companies less competitive globally and measures on energy efficiency, food standards, biotechnology, and health and safety have been reviewed. Dynamic deregulation has also occurred in newly developing economies of Russia. For instance, land utilization and tax laws have been reformed in order to attract overseas investment in forestry and mining and environmental standards are currently under private pressure for deregulation (Castro, 210). In countries like Canada and North America, deregulation has been expanded from free trade zones to wider state economy. Environmental regulations have been lessened, restrictions on foreign ownership abolished and trade negotiations committees liberated from environmental and planning controls and consented to repatriate profits without any restrictions. In this respect, the Canadian government should allow the BHP Billiton takeover of Potash Corp, because Canada is a trading state with a free market and encourages foreign investment. In addition the private company has the ability to effectively manage this resource because it has more incentives. In modern democracies, redirection of government expenditure does not imply that public funding has essentially been reduced: it means that the funds directed elsewhere. Several public finances for environmental and social programs have been reduced as a consequence of structural adjustment. These finances have been availed to foreign corporations which have been offered liberal conditions to establish extractive industries or production facilities. Apart from obtaining subsidies from state governments, companies are increasingly benefiting from a wide range of fresh subsidies from multilateral development banks (Nagel, 20). Countries like North America and Canada have gained from contracts for development of public sector projects like roads, irrigation, and airport schemes, contracts which are awarded by the state but funded by the multilateral development banks. Auroi, (215) argues that, a country like Mexico is building private roads and private agreements are validated by its promoter on the basis that the private sector, and not indebted states has adequate funds to construct huge infrastructure projects, and commercial risks should be borne by corporations and not by the state. Conclusion The modern democracies endorse free market economies implying that the state don’t have the management capability or legitimate authority to run the economy. Therefore, ownership of industries by states, state planning and state regulation of economic policy should be avoided because they discourage entrepreneurial activity, minimizes individual’s freedoms resulting to ineffective exploitation of resources and this implies that states should have a minimal role on the social and economy life of the country. Works cited Bryce, Viscount. Modern democracies. Oxford: Oxford University Press, 2002. Birch, Anthony. The concepts and theories of modern democracy. London: Routledge, 2001. Smelser, Neil, & Swedberg, Richard. The handbook of economic sociology. New York: Blackwell, 2005. Nagel, Stuart. Policymaking and democracy: a multinational anthology. Maryland: Lexington Books, 2003. Auroi, Claude. The role of the state in development process. Cambridge: Cambridge University Press, 2004. Baehr, Peter. The role of the state in the 21st century. London: Martinus Nijhoff Publishers, 2006. Hemming, Richard., & Mansoor, Ali. Privatization and public enterprises. Cheltenham: Edward Elgar, 2000. Castro, Ana. Institutions and the role of the state. New York: John Wiley and Sons 2000. Clarke, Thomas. The political economy of privatization. Blackwell: Oxford, 2001. Eliasson, Gunnar. The limits of government: policy competence and economic growth. Cheltenham: Edward Elgar 2001. Read More