The dispute about the role of government in times of economic downturns is still active among economists. One group stresses that the government should preserve its “bystander” role. Experts who support this idea believe that forces of a free market are capable of regulating the economy both during bad and good times. Hence, the government has no need to be involved, and the market will successfully deal with all emerged issues by itself. Another group argues that the government should play a “supervisor” role, who monitors the economic situation and then intervenes with a well-defined policy. Such a policy should be aimed at overcoming market failure, prolonged recessions, reducing unemployment, and maintaining a situation during a health or environmental crisis.
The common policies, spotted in areas of medical care, environmental quality, housing, and immigration, should be considered to assess the necessity of governmental interventions. According to Sowell (2008), government-paid medical care usually means that prices are artificially controlled and lowered by the state, which brings about adverse outcomes. In the long-run, price control leads to quality deterioration of medical care products and services and to decline in its quantity. For instance, such price control issues were seen in the Soviet Union, Japan, France, and the UK (Sowell 2008). Lower prices, which are not regulated by demand and supply, increase the consumption of particular goods and services but, at the same time, remove incentives for producers and caregivers to provide them.
Government-paid health care also drives up costs because people with minor medical issues demand more medicines and caregivers’ attention than they actually need, just because those services are free. Third party-payments also tend to increase the cost of the treatment due to the bureaucracy complexity that is needed to administer this process and skyrocketing demand for medicines (Sowell 2008). Moreover, government-run medical systems meet high costs that are not included in economic statistics such as premature deaths and pain. It seems that the US mixed approach to health care is the most effective one. Nevertheless, the government should control such medical care elements as organ transplantation and drug approval, but it should be based on appropriate and transparent regulation.
In terms of housing, rent control is a trendy type of government intervention because of its political attractiveness, but it has negative economic consequences. Lowered prices encourage people to demand more housing than they need. Thus, there will be a shortage, a decline in quality, and the development of the black market (Sowell 2008). Moreover, rent control usually makes it unprofitable to build new houses and even reduces incentives to maintain existing housing. Nevertheless, governmental intervention in real estate is necessary, taking into consideration its unique social and economic aspects. The government is usually expected to provide proper legislation, subsidies, zoning, price policies, and taxation.
Moreover, in the age of globalization and increased population mobility, mass immigration is still a problem. For instance, the EU members suffered from the migrant crisis, which was caused by the arrival of vast numbers of refugees, mainly from Syria, Afghanistan, and Iraq (Sowell 2008). From the basic economic reasoning, it is an inflow of cheap labor force, but in reality, immigrants tend to abuse governmental supporting policies instead of working. In such emergency cases, the interference of the state is needed because such kinds of immigration can disrupt the normal market functioning and increase costs.
Keynesian and Schumpeterian economic schools have totally different views on governmental interventions during economic shocks. The latter states that an economic downturn is a natural process that should not be regulated in order to punish insufficient economic bodies and to relocate their resources to those who will emerge later (Sowell 2008). On the contrary, the Keynesian school believes that governments have to deliver policies responding to the economic recessions because the free market is not able for a quick repair. In such situations, countries have to support demand by higher government spending in order to avoid permanent capacity decline and artificially keep some sectors adrift. However, such forms of stimulus as infrastructure projects and higher wages should be applied in the short run to avoid a further decline in economic activity. The government plays an essential role in stabilizing the economy with the help of financial sector regulation and monetary policy.
Scripture teaches that responsible stewardship requires two interconnected elements. According to Beisner et al. (2000), the first one is a personal freedom that makes it possible to utilize or sell the outcomes of that person’s labor to have benefit. The second element is the system of responsibility that proclaims that people should be accountable for their deeds under a special legal framework. This set of responsible stewardship simultaneously encompasses the notions of human sinfulness and the image of God (Beisner et al. 2000). It means that the government should restrict the freedom of people to avoid malpractice. Nevertheless, those institutions as well consist of sinful individuals, so another level of restrictions should be in place. The Christian tradition is closer to the free-market economy and private ownership, so governmental interference should be limited to delivering legislation and responding to economic downturns.
The Christian worldview is based on the assumption that people are obliged to care about the environment. According to Hayes (2016), the Bible encourages humanity to apply environmental stewardship. Scripture tells that people can rule the “dominion,” have authority over all living things and “subdue” the whole planet. Nevertheless, God expects people to take care of animals and land, not to cause harm to them without serious reasons. Christian ethics states that caring makes people closer to the Creator, and this process meets social justice, health, and economic reasons.
Despite the belief that original Creation will be ultimately restored, people have to sustain its current conditions to be sure that there is no overexploitation of natural resources. In order to be healthy human beings must live in a robust environment, so selfish companies and enterprises which often exploit nature and contribute to its pollution should be stopped. It means that governments have to enact strong environmental regulations and laws concerning energy use, recycling, and pollution. According to Terrell (2002), extensive government interventions to decrease car gas emissions usually lack comprehensive calculations and lead to more costs than benefits. Taking into consideration Christian ethics, Beisner et al. (2000) state that the best driver of environmental protection is the market itself because it leads to more cost-effective measures and eliminates corruption.
To conclude, the government has to intervene in the economy during a recession to stabilize the situation, but this intervention should be well-defined and timely. Christian ethics supports only limited interventions because its ideas strongly correlate with capitalism. The free market encourages big companies to care about the environment via their corporate responsibility incentives. Nevertheless, government regulation and control are needed to decrease pollution and waste gradually, while a public-private partnership should be maintained.
References
Beisner, E. Calvin, Thomas S. Derr, Diane Knippers, P. J. Hill, and Timothy Terrell. 2000. “A biblical perspective on environmental stewardship.” In Environmental Stewardship in the Judeo-Christian Tradition: Jewish, Catholic, and Protestant Wisdom on the Environment edited by M. B. Barkey. Grand Rapids, MI: Acton Institute for the Study of Religion and Liberty.
Hayes, William. 2016. “Christians and Environmental Stewardship: Creation Care or Crying Wolf?” Adventist Review: 45-53.
Sowell, Thomas. 2008. Applied economics: Thinking beyond stage one. New York: Basic Books.
Terrell, Timothy D. 2002. “Would Jesus Buy an SUV?”Chalcedon. Web.