Trust in the American Government
2001 marked a shift in the public’s trust in the American government. Poll numbers showed the perception the public had for the government to do what is right almost always or most of the time decreased from 49% to 20% between 2001 through 2022. Trust in the government hadn’t been that low since 1994 when it was between 19% and 22%. With trust being so low, it’d be right to infer that American citizens would prefer and encourage the government to take a step back in their economic lives by wanting the government to take a more laissez-faire approach. But to do so, ensuring the public knows what a laissez-faire approach to the economy would entail is important to establish.
Origination of Allow To Do
Laissez-faire has origins beginning in the 18th century in France. Meaning “allow to do” in French, the first recorded date of use of laissez-faire was in the late seventeenth century and was originally quoted as “laissez-nous faire”. It is described as the idea that the government should interfere as little as possible in regards to economics. The term “laissez-faire” gained common usage due to John Stuart Mills’ Principles of Political Economy in 1848. Since then, it has been frequently used to describe economics, management, and leadership styles. The laissez-faire economic theory is what will be discussed today.
Theory in Practice
As an economic theory, laissez-faire means that governments aren’t entrenched in major economic decisions. Instead of creating rules and regulations which govern financial institutions, the market, and the economics of the country in general– laissez-faire relies on individuals to know what is best for them, their company, and their market regarding their financial needs. In the modern day, the United States subscribes to a mixed economy which provides freedom when deciding what to do with your capital, but which allows the government to intervene if needed. In the past, there were time periods where the country was more hands off in the economy than in others. Such as in the Gilded Age (1870s-1900) when the country was grappling with political corruption along with monumental growth in various companies.
Arguments and Theories Against No Interference
Laissez-faire was on the rise, but it had well-known critics as well. One of the more well-known individuals was John Maynard Keyes. They were adamant and resolute in their belief that allowing the economic world to have such freedom was not the path countries should be taking. The belief he held was so strong that he wrote The General Theory of Employment, Interest, and Money in 1936 stating the government ought to intervene in order to generate economic growth and sustain employment levels. Keyes wasn’t alone in his belief. Other figures included Henry Sidgwick, Gustav von Schmoller, and lesser known but nonetheless still an ardent opposer was Robert Lee Hale. Critics argued for different theories which were against laissez-faire such as Keynesian economics. One of the arguments used by critics against laissez-faire was that the lack of regulations leads to an economic imbalance between those who need financial assistance and those who don’t. The theory opposing laissez-faire is dirigisme which encourages state intervention. The meaning behind this theory was “to direct” and sought to prevent market failure. Instead of “allow to do” it was “allow to don’t” and centered around the government making key economic decisions.
Summed Up Thoughts on Laissez-Faire
The United States has prior history in what a world looks like which favors economic deregulation. Although the Gilded Age was a time of monumental growth in various industries, it was also defined by harsh labor conditions which threatened the lives of the very individuals who were instrumental in building up the large corporations at the time. What was needed was robust economic rules and regulations which lead to stricter parameters which are difficult to surpass or work around. If the government seeks to create tighter and more clearly defined rules and regulations then it must be said that they also need to increase the public’s trust in the actions they take. All that to say, rules and regulations which govern the country’s economy are beneficial due to the clear guidelines which are provided to companies and the protections created for the average worker. The laissez-faire theory is no longer the path forward which would support that.