2 - Interventionist SS Policies

Question 1

What are they?

Answer 1

The government directly intervening to improve the long-term supply-side of the economy

Question 2

Types of interventionist SS policies

Answer 2

• investment in infrastructure
• interventions to reduce poverty
• provisions of public and merit goods
• investment in ideas/innovation
• state ownership of key businesses (nationalisation)
• policies to tackle labour market failure ( gov provides more education/training to increase occupational mobility for example)

Question 3

Evaluations

Answer 3

• time lags
• income distribution (winners and losers depending on which economic agents perspectives are being considered)
• potential for gov failure (unintended consequences as gov lacks perfect info)

Question 4

Problems

Answer 4

• bureaucracy and inefficiency (lead to misallocation of resources)
• crowding out private sector
• reduced incentives
• ineffective redistribution
• costly and inefficient state enterprises (they may not operate with same degree of cost-efficiency and innovation as private companies)

Question 5

Examples of interventionist SS policies