Adam Smith vs FDR

Adam Smith’s views on economic freedom represent a different time. Under his influence, the laissez-faire concept, which is the idea of letting things take their own course without intervening, received various support in classical economics. But times change, and the economy is in peril and actions must take place in order to repair the damage. “Government in 1933 was determined not only to save the system, but also to remove from it the abuses, evils, and widespread maladjustments which had brought it to the very brink of destruction”.

The fourteenth amendment vows to protect the people therefore, government intervention is needed at times in order to ensure the safety and wellbeing of our citizens. Smith’s opinion on economic freedom may touch on the subject that the government’s interference with the economy can do more harm than good.

He can argue that the free market influenced by the government can be looked at as “political” peer pressure. Interfering with the economy violates personal freedom when the government takes action into their own hands it takes away from a person’s ability to decide on what to spend and how to act.

But when citizens lose their jobs, go bankrupt, or aren’t spending their money wisely, who can they go to for financial aid and support? With the government providing financial assistance it could help to sustain those citizens. He may also argue that economists and businessmen don’t get involved in politics because the government can then become liable if the decisions they make turn out to be the wrong ones.

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Economists know the market and they’re better at deciding what and how to produce. On the contrary, politicians at times, can receive some support from wealthy businessmen even economists whose political ideologies they agree with as well as who they want in office. So politics and economics go hand in hand.

But, Adam Smith isn’t looking at what will be good for the people, government intervention can better the equality of income and wealth. A reason being, with the market failing, the government can take the opportunity to either provide goods or subsidize them. Inequality can be a problem among the free market. For example, companies can utilize monopoly power to pay low wages to workers and charge high prices to consumer. The New Deal was successful both short and long term. “I recommended, for example, that new tax legislation was necessary–first, to prevent continued tax evasion by some few individuals and corporations; and second, to make sure that the principle of ability to pay was not violated by the tax structure.”. To say government intervention can be helpful would be an understatement. The New Deal was successful both short term and long term. It allowed Americans to prosper again, brought back jobs to low working class citizens, and helped balance the economy. Without the New Deal America would’ve been able to grow and strive again, yes–but it would’ve taken much longer and would’ve caused a great deal of more suffering to those who already were suffering.