American History

Government involvement in issues concerning the economic well-being of a country is very important. For a reason or the other, the involvement is usually meant to protect the economy and the citizens from the effects of unregulated markets. Unregulated markets bring about different effects to the economy such that in the long run, the countrys economy might be affected negatively or positively. The most likely event is that an economy will take a serious beating if the key sectors are not regulated. For instance, the prices of some commodities need to be regulated by the government so that the consumers are not exploited. Other ways through which the economy can be regulated is through the introduction of tariffs and taxes on goods that are imported.

The US government, in the post Industrial Revolution era, decided not to involve itself in the affairs of its economic markets. This was due to the fact that the private sector had shown a competitive edge and could as such be let to run their businesses without government control. This initiative was meant to make it easier for new businesses to flourish without the interference of government. The government processes had in that time been very bureaucratic to an extent that registration of businesses was a very tedious process. The late nineteenth century and early twentieth century saw fierce competition between the players in the private sector. This not only increased the incidences of business malpractices but it also led to a situation where unfair competition was common-place. As a matter of urgency, the government had to act in time. The early twentieth century brought with it bad tidings as The Great depression set in shortly after the 1920s. These are some of the reasons why the government had to intervene.

First and foremost, the firms that had been established in the 1800s had created monopolies that seemed to control the prices to their advantages. This affected the average citizens who could not afford the frequent price rises and unsteady compensation packages offered at their work places. This led to the establishment of anti-trust laws in 1890 to curtail the activities of these monopolies (Legal Information Institute 1) (Anti-trust 1). These laws reduced the unfair competition practices that eventually led to prices of important goods rising exponentially. The main reason behind this was so as to ensure that the US citizens were not exploited due to reasons that were beyond their control. The control of prices of goods was however limited to a certain extent as it mainly covered sections that the government thought would have the most significant impact on the economy. This significantly reduced the monopolies malpractices that were counterproductive to goals aimed at economic growth.  
The Great Depression of the late 1920s had managed to cripple most financial institutions that were considered to have good financial standing. The effects to the small establishments were devastating. Business Malpractices such as insider trading in the stock market needed regulation as they were detrimental to the economy. The election into office in of Franklin Roosevelt in 1932 led to a number of measures that the government considered key in alleviating the effects of the depression. Most of these measures were not within the government policy but Roosevelts campaign pledges. However, after considerations, they were incorporated into government policy so as to make them more effective and well funded. Most of them included policies that ensured the citizens who were above a particular age had jobs (Rosenberg 1) (The Great Depression 1). This led to a better living standard for the citizens and an improved workforce necessary for economic growth. This brings into the picture the introduction of social welfare into the US. It has been argued though that social welfare had begun sometime earlier before the depression (Trattner 1) (The Federal Government and Social Welfare in Early Nineteenth-Century America 34). Social welfare was meant to reduce the effects of the depression to the unemployed. It came in many forms. For instance, the government could offer some of the citizens affected jobs that could sustain them for a certain period. It could offer vouchers for food and healthcare to the unemployed and elderly people. Housing was also provided mostly to the sick and the elderly. All these services were aimed at reducing the stresses of daily spending so that the government could at least earn the services of a motivated workforce in sectors such as agriculture.

In conclusion, more often than not, monopolies usually tend to come up with ways through which they can earn super-profits. To a large extent, the plight of consumers is usually ignored as the price fluctuations are left to affect them. Many governments would thus enforce laws so as to minimize this kind of exploitation. The US government had to abolish the laissez faire policy so as to tackle issues that would be detrimental to the economy if no intervention was carried out. This led to the reduction of business malpractices in the late nineteenth century going into the early twentieth century. As a matter of fact, the government introduced rules that not only regulated the exploitation but also made the competition amongst the industry players fairer. For instance, the regulations and price tariffs introduced in the rail-road sector reduced the exploitation of both new entrants and consumers of this important service. Social welfare, on the other hand, had to be made a reality after the effects of The Great Depression. Government involvement only made sure that it was well organized and better-funded. By and large, the rules introduced by the government drastically reduced the effects of all the unregulated markets and the depression. It therefore became a basic tool in regulation of the economy.