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Pros and Cons of Laissez Faire Economics

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Submitted By BxAlbo
Words 825
Pages 4
Brandon Czubak
2/1/14
History 106
Assignment question 2

Question 2: By examining Robber Barons such as Vanderbilt, Rockefeller and Carnegie, how could you argue for Laissez Faire Economics and against Laissez Faire Economics?

Laissez-Faire is a type of leadership style in which leaders are hands-off and allow group members to make the decisions. This results in pros and cons of Laissez-Faire leadership. It is effective where group members are highly skilled and motivated, such as scientists and researchers. The downside is its unsuitability in situations where group members lack the knowledge or experience to complete tasks or make decisions. The Laissez-Faire economic policy comes from the French phrase Laissez-Faire meaning "let things alone." As a result, the Laissez-Faire economic policy means a strict free market. Some strengths of this economic policy are there are no regulations or taxation on commerce. This encourages the growth of businesses. However, with this type of economic system if a business does poorly or needs help the government isn't responsible. So, even though the Laissez-Faire economic policy has some good advantages, it also has a major disadvantage. One of the strengths of a Laissez-Faire system is the growth of businesses, as I mentioned in the previous paragraph. With anyone, who has the right requirements, able to start a business the number of products grows. Therefore, the GDP, or gross domestic product, grows, and a growing GDP means a healthy economy. This means more businesses will grow and jobs will become abundant. It's like a cycle. Therefore, the Laissez-Faire economic system has a very positive advantage. The Laissez-Faire economic system was used in the United States in the 1920s. President Coolidge, the President at that time, thought that the Laissez-Faire economic system would benefit the US, and it did. Businesses prospered and, the American people were happy. With shorter working hours and labor saving machines, Americans had more free time. As a result, they went to movies and sports events because they had the time and the money. Overall, in 1929, the money spent on entertainment went up by a hundred percent in a decade. The Laissez-Faire economic system is part of what made the "Roaring Twenties" so great. A positive factor coming from the Laissez-Faire economy is the rapid economic development. Corporations given largely a free hand in their own affairs will expand the quickest. Most notably they try to create industries that people will need in the future such as Microsoft, US Steel, Carnegie Steel, and Standard Oil. Carnegie Steel had later turned into US Steel by Morgan. One of the cons of Laissez- Faire economics is minimal government involvement.
Monopolies are a definite possibility within a Laissez Faire policy. This leads to bad business practice, such as underpaying your employees, and overcharging for your products. The Robber Barons of the age: Carnegie, Rockefeller, Vanderbilt, and Morgan had exploited their workers and the necessity of their industries. Steel, oil, and transportation are indispensible. Laissez Faire leads to ultra powerful mega corporations that dominate the market, which destroying fair competition and free market enterprise. In addition, these mega corporations will eventually destroy the democratic and political freedoms of the nation, which they preside in by corrupting the government. Laissez Faire can cause an unstable economy, which will suffer numerous bubbles that often burst, which don't harm the big mega corporations that cause them with their irresponsible business practices, as much as it does the lower class. Another con resulting from Laissez Faire would very poor living conditions for ninety percent of the country, which must live off of meager wages, and are given substandard services and defective products to purchase. Laissez Faire causes rapid degeneration and destruction of local environments, which also puts local populations at severe health risks. Laissez Faire also alienates foreign markets and causes massive wealth disparity. Laissez Faire is individualism: the doctrine that government should not interfere in commercial affairs. It could have negative effects when dealing with other countries that we need to communicate with. If a business owners business eventually tends to decrease in the amount of success and tends to shut down, the government can’t provide these people minimum wage jobs after they failed to live on their own. Laissez faire is a form of Capitalism, which is a social system based on the principle of individual rights. There any many supporters and non-supporters associated with this system of belief. It’s not very easy to build and manage your own business without any type of legal authority, which explains why there is a lack of professionalism with the individuals who participated and were associated alongside Laissez Faire. There is no real authoritarian leadership for the workers who work under the self -established boss. There is no established order that helps regulate the business to run properly and smoothly without a high percentage of difficulty and confusion.

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