State Intervention in the Economy - Essay Example

A state’s intervention also protects the consumers, the entire community, and producers. This is where some originations especially those enjoying monopoly, may tend to exploit the consumers by charging them exorbitant prices for goods offered. Thirdly, the state’s involvement prevents inflation crises depression, and unemployment. This is realized through the industrial revolution especially from an agricultural to industrialized society (Bandelj & Sowers, 2010). More so, government intervention enacts legislation that protects the whole community from harmful chemicals released from large corporations.

There are also negative effects of state intervention. The sustainability of some policies may reduce the ability of future generations to engage in some economic activities. It introduces inequality effects. In this case, the policy may favor one group of society to benefit more than another. it also causes unintended consequential law. Government interventions can fail to obey the economic theories especially in case of government failure. The inefficiency of the policy may result in some government interventions leading to poor use of resources in terms of their productiveness, dynamic efficiency, and their allocations (Drake, 2010).