Microeconomics: Government and Market Relations

Critiquing government policies and attempting to create one that will bring success are two different activities. While one can say that government failures are worse than the market ones, it is clear that both of them can significantly impact people’s lives. However, state’s governments control many factors that contribute to people’s prosperity, while the market’s influence is substantial but limited. Moreover, “fixing” government mistakes may prove to be a task that is more daunting than keeping it stable. Political and economic influences play significant roles in directing the government and deciding whether it will move forward or stay in one place.

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Changes are not accepted by people readily. As Wheelan notes, even though economists generally agree which policies could be beneficial for the government and its people, they cannot implement them without causing a social conflict (176). Interest groups have an impact on these decisions not only because of their money but also because of their active stance. The misunderstanding of globalization and its benefits is a clear example of such influence. People invested in the interests of their group and themselves prefer solutions that are easy for them to control. Therefore, governments often cannot implement solutions that would be advantageous to many but ignore the wants of the few.

Market failure can be fixed with or without the help of the government. It is full of industries that can be reshaped, improved, and updated. A government is an entity that influences civilians and businesses alike. It is not as flexible, and it does not consist of small branches that can be quickly remade. Thus, its failure to appease all interest groups may lead to devastating outcomes. If it succeeds at being stable while providing these associations with necessary support, then any attempt at fixing this situation may result in outcomes much worse than the current situation. That is why the “cure” may be worse than the “disease” – people’s opinions and activities matter for whole governments and separate politicians as well. Countries, districts, and cities are run by individuals who know how to establish a connection with the public.

Interest groups can range from large, influential industries to small but active associations. One can find a plethora of such groups anywhere because people often collaborate and join forces to promote their cause. As Wheelan notes, all people belong to some group even if they do not realize it (185). In my home country, Colombia, there exist many interest groups based on their occupation and demographics. For example, different social sectors such as indigenous peoples, women, students, the elderly, and others can be identified. There are farmers, coca growers, and people living in urban environments. Furthermore, various teacher, lawyer, and medical associations have an impact on the country’s policies. Finally, different business organizations also affect the way the government acts.

In order to govern a country, politicians have to make choices that would not result in people turning their backs to the authorities. Therefore, while some economic decisions may improve the situation in the state, the opposition of small but influential groups becomes a barrier to changes. People can be more interested in supporting their own needs than those of others. If a government tries to introduce a solution to the system that is flawed but stable, the outcome may be even worse than the problem.

Work Cited

Wheelan, Charles. Naked Economics: Undressing the Dismal Science (Fully Revised and Updated). 2nd ed., WW Norton & Company, 2010.

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StudyCorgi. (2021, June 24). Microeconomics: Government and Market Relations. Retrieved from https://studycorgi.com/microeconomics-government-and-market-relations/

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StudyCorgi. "Microeconomics: Government and Market Relations." June 24, 2021. https://studycorgi.com/microeconomics-government-and-market-relations/.

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StudyCorgi. 2021. "Microeconomics: Government and Market Relations." June 24, 2021. https://studycorgi.com/microeconomics-government-and-market-relations/.

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StudyCorgi. (2021) 'Microeconomics: Government and Market Relations'. 24 June.

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