What happens with laissez-fare economic policies?

Answer 1

Generally speaking, in a laissez-faire economy Government and lawmakers meddle and regulate as little as possible in the economic process and let the 'laws of economics' do their thing. Many Republican politicians are much in favor of the system, which has taken more root in the US than in any other Western country.

The problem with laissez-faire that the laws of economics never work out as neatly as in the books. If the Government wouldn't forbid the forming of Cartels, companies in an unlimited fight for the hihest profits would try to 'corner' their markets and so keep prices artificially high - as happened in the US in the late 19th century and today, in the cost of health care and medicines, many times higher in the US than in most other Western countries. The US' free market system was also responsible for the US being the last Western country to abolish child labor, and the law abolishing it was labelled "Communist" by most laissez-faire politicians in the US.

A laissez-faire policy would also not lead to any decent form of social security of medicare - just look at the fierce resistance against Obamacare, while in other Western countries such medical insurance has been common for many decades. Laissez-faire also leads to minimal regulation. Remember for instance when Ronald Reagan de-regulated savings and loan companies? A little later the US was rocked by the Savings an Loans-scandal.

If the US Government wasn't actively involved in making fiscal rules for US companies working worldwide, the loss of jobs to 'cheaper' countries would probably be much greater than it already is and big US companies - just look at Google today and Microsoft yesterday - would have unlimited scope in finding ways of not paying any taxes at all to anybody.

The list is almost endless. Basically, in any society a Govenment has to look out for all its citizens' interests - and that means not letting companies get away with substandard quality, rigging of prices, not paying taxes or cooking the books. Plus, any economy needs forms of regulation that ensure that it stays healthy even if it doensn't contribute to maximum profit: payable health care, affordable and good-quality education, social security etcetera. Laissez-faire means 'let the market take care of it'. History has a great number of examples - certainly in the US - that show that it often doesn't work that way.