In this chapter, I learned about some negative effects government decisions can have on the economy that I had never considered before. When the economy is controlled by the private sector, decisions involving where resources are allocated depend on what will be the most productive use of them in the market. However, when government has some control over an aspect of the economy, decisions are made based on politics.
Wheelan provides examples of economic decisions made by governments such as the production of steel plants in the former Soviet Union to ultimately build a rocket to go into space, and the investment of the high-speed particle accelerator, which was a project that required large amounts of money in resources but ended up being abandoned. Ultimately, these decisions that are made by politicians often direct tax money towards inefficient projects that fail to advance the economy. Wheelan states that, "the less the economy is left to politics, the better" (Wheelan 87).
Reading about the negative effects, as well as the positive effects, politics can have on the economy intrigued me and made me further understand how certain decisions are made pertaining to the use of resources and what their effects are.
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