• The Manitou Messenger celebrates over 125 years of student journalism January 23, 2013

  • Printed weekly and updated online daily January 23, 2013

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Government intervention needed to end poverty

Seth Ellingson, Contributing Writer

In recent years, the Great Recession has highlighted the need to reform our economy. We don’t need a massive overhaul of our existing principles, but rather something more subtle and gradual. We don’t need a revolution, but instead, reform. The reform should come in the form of regulations.

Poverty is one of our capitalist society’s most unsavory problems. Countless doctrines have produced systemic fixes to this blight, yet the problem still persists. However, capitalism exists in varying degrees depending on a nation’s development level. In other words, solutions for some countries will not fix the same problems in other countries.

The 20th century has seen the rise and fall of several confident economic doctrines. The United States saw its fair share of economic shakedowns and breakdowns during that tumultuous century. Yet, as former Secretary of Labor Robert Reich pointed out, we did not turn to the extremes of fascism or communism. Rather, we worked on reforming our brand of capitalism.

Regulations and capitalism go together like alcohol on a wound: It stings for a bit but in the long run it heals up nicely. Even the grandfather of modern day laissez-faire policy, Adam Smith, advocated tightly maintained banking regulations. Predatory practices in seemingly small fringe parts of the economy such as banking should have their own leash laws. Such regulations are necessary for the preservation of basic liberty and of course the destruction of poverty.

Both developed and developing countries can benefit from one simple reform: greater government presence in the economy. This idea does not advocate a soviet-style redistribution of wealth but simply an increase of government supervision in the economy. The Great Recession and the blight of poverty signal that the idea of free market capitalism is failing us.

Free market principles perpetuate poverty instead of assuaging it. Right-leaning politicians usually claim that increased competition will drive down costs, increase efficiency and lead to higher-quality products. However, any economics major will tell you that “competition” is not a determinant of supply.

Take the health care industry for example. The free market system in the U.S.  led to 50 million uninsured Americans with millions more stuck with junk health insurance. Enter the Affordable Care Act. Sure, the website has some glitches and is a bit rough around the edges, but the government-sponsored online marketplace works toward equity in health insurance. The main problem with the Affordable Care Act is that the government is not going far enough. The same holds true for the economy: the government is not going far enough.

If the government participated in our lives more, poverty levels in the United States and in other developed countries would drop. In underdeveloped countries, governments can sponsor microloans instead of having wealthy individuals taking matters into their own hands. This practice would lead to a greater business presence with a grassroots twist in developing countries. On the other hand, regulations in the more complex aspects of developed countries’ economies would allow for more equality in income distribution. Industries such as health care and banking would not make a ridiculous profit from people’s lives.

In short, President Reagan should have announced that free market principles are not the solution; they are the problem.

Seth Ellingson ’15 (ellingss@stolaf.edu) is from Powder Springs, Ga. He majors in political science and Russian.


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