STUDENTS AND LABOR UNIONS

b.
The world over, governments are decreasing their role in the functioning of their
economies and in contracts between labor and management, letting the free market decide the
equation between them. In France, however, students and labor unions want the state to
increase its role in providing a better standard of living and to provide more job opportunities.
Discuss the long-term advantages and disadvantages of such interventions.
Suggested answer
Workers are most productive and a nation's economy functions most efficiently when people
can pursue their own economic interest freely. A healthy economy leads to higher living
standards and greater prosperity for individuals. It also helps businesses to be profitable, that
generates employment and income. However, the long term advantages and disadvantages of
government interventions are stated below.
Advantages
(i)
Government can help to stop the economic downturn and to make market economies
function properly in a desired fashion.
(ii)
It is easy for government to make economic framework strong and resilient by taking
the private sectors in those areas where they are hesitant to invest.
(iii)
Government can help promotion of business and services to facilitate high-skill,
knowledge-based economy. The opportunity for real jobs creation can only come when
government creates a climate for private/other enterprise with the most effective training
programs.
(iv)
Government may enact laws and regulations to protect workers and consumers. It
prevents employers to discriminate in hiring on the basis of age, sex, race, or religious belief.
Child labor can be prohibited. Safety and security of the workers are ensured.
Disadvantages
(i)
Money is taken from efficient producers and workers to keep inefficient producers in
business. Government intervention increases the risk of inappropriate resource allocation.
Consumers pay for this method in the form of high prices.
(ii)
The inefficiencies of bureaucracy lead to the failures of government-controlled
programs in a nations economy. In a free market, as aggregate demand increases and the
general level of economic activity grows, employment increases for all groups in the
economy, including young adults and even older workers.
(iii)
The government can increase tax of the working classes in order to subsidize another
individual, possibly at a higher rate of compensation, for doing non-productive work.

(iv)
The price of a product can be set below the equilibrium point, to allow each consumer
to afford it. The government must help the producers in the form of subsidies in order to
maintain their supply. This method is very expensive.
(v)
Long term/root problem of whatever cause has not been solved, or only parts of it are
solved. This has been true of all government interventions.
(vi)
Many of the businesses that caused the need for intervention still exist, and will
continue their poor business practices. Such interventions keep prices high and hurt efficient
competitors.
(vii) Government regulations dealing with business often become obsolete as soon as they
are written because business conditions change rapidly.
(viii) A businessman want to open a plant or factory or business with the expectation of
receiving a profit, and the worker want to attempt to sell his labor to the highest bidder with
the most desirable return for his work. This freedom of choice benefits all parties concerned
in a free market economy. Government-created jobs programs deny the operation of this
successful system.
Conclusion
The negative effects of government intervention in the economic sector outweigh the benefits
of policies and methods implemented to help the labor unions. Real prosperity and strength
for the economy will only come when all ill-fated schemes of government intervention are
abandoned in favour of using the strengths of the free market.