Explain how government interference in a market can lead to inefficiency?

Answer 1

One example is with Tax and to much regulation. The more money you take from a Company, the less it can give back to it's employees leading to less productivity. The more regulations put on a company the more it restricts growth with that company and spreads to the Country and can effect world markets. More and more government regulations are making it hard for small business's to start. When you take from and restrict more from or to a company, you then cause a drop in employment. Funding to Education so that people can enter in to jobs is critical as well is placing regulation where it needs to be like on banks and credit card company's that charge high interest. Same as jobs, if you take more money from someone and force them in to debit with high payments with high interest then a student is not likely to buy a home or car and get in to more financial trouble. This slows down the market. Solution is Lower interest rates and put a cap on what % a bank can or creditor can charge. Put more money in to school. Set a one Tax % rate for all regardless of how much they make. Tax should be fixed at 7% for state and government tax. That is more then they need to fund all programs and lower the deficit with no new spending. If it is not working it is due to someone stealing money out of the 7% or waistfull or over spending. I run a nonprofit and asked for funding. The US Government told me i could get funding but my building would need a wheel chair ramp, and the ramp must cost $150,000.00 or more and they will fund it but will not fund projects under that. So I refused funding as I do not support over spending. A ramp was installed for free by a local contractor who donated it. If anyone is wondering I register as an Independent in the USA for voting and I vote according to the person running for office, not the party they are from. If I had to pick Democrat or Republican I would go Republican as they seem to understand jobs and economics more the others, but I do not see eye to eye with any one party. I understand that each country has it's own interference with it's own markets and this effects the world as most every country is hit with hard time right now, so you can't blame one president or leader for a bad market. Regulation needs to run like a regulator. Set at point to insure the right amount of flow of a gas or liquid so that disaster never hits. Do not over flow a market. Regulation is needed but must be set to a productive flow, not a destructive flow. Unfortunately most Governments interference in a market leads to just that. Greed and miss use of money. Every one in office should be investigated and every penny needs to be accounted for. They require it from all of us, so why don't we require it from them? To sum it up, when a company is forced to lay off employee's and cut hours it's productivity falls, and with this the Market will always follow.