The Economy and the Role of the Government

Because the United States economy is driven by perhaps the best example of a consumer-based society and a capital-driven citizenry, it is important to understand and interpret what role the US government plays in the operations of our economy. Historically, the degree to which the government has played a role in the economic structure of the country has defined the large differences in the outlook and well-being of the citizens of the United States. Whether this meant the institution of greater social programs and economic safety-nets under FDR's "New Deal," or the lessening of governmental influence in the capitalist days of Reaganomics, the role of the US government in the acquisition and redistribution of money in society is central to understanding the relationship between resources and the citizenry.

Though the United States has been the world's foremost economic power for the last fifty years, it is not without difficulty that the earning potential of such a vast landmass (and disparate groupings of people) is converted into basic services such as universal healthcare or education systems.
Though individual Americans normally pay out a large portion of their earnings in income tax, because the government is such a vast, complex system, it is extremely difficult for tax revenues to be converted easily into social services -- social services being, presumably, what taxes are for.

The government, as a bureaucracy, naturally needs some of that money just to stay up and running as well. However, the ways in which particular governments go about spending American tax dollars is most illustrative of what the government's role in our economy is. At every election campaign we see the differing opinions on what this role should be, usually with one party advocating less taxes and hence less government spending, and the opposing party proposing higher taxes in favor of distributing money through sound governmental planning.

What this all means for the economy and the government is that they are both dependent upon one another. Along with a lessening of governmental involvement in social services, comes a more privatized, individuated society with lesser social responsibility. However, with increased taxes or more governmental control over certain aspects of social services, comes greater difficulty in how to properly distribute the funds from coffers.

But in the end it is the growth of the economy that is most often on the minds of Americans. Is the economy strong and getting stronger? There are, of course, differing philosophies on how to best create a successful economy as well. Some believe that less taxation from the government will increase individual buying power and thus cause business profits to rise. Others believe that the types of benefits that the government ought to use American tax dollars to fund are essential to forming a strong, stable economy with less likelihood of overproduction or collapse.

Both systems of thought produce certain effects on not only the economy, but the mindset of American citizens. Just which system is better in the long run is for the fortune tellers to find out, but it seems certain that the future of the United States' economic prosperity will be contingent on the degree to which its enormous government plays a role.
By InvestorGuide Staff

Copyrighted 2020. Content published with author's permission.

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