What happens with laissez-faire economic policies?

Answer 1

As your question is a general one, I'll give a general discussion of laissez-faire economics. You might then apply these basic ideas toward more specific learning and concepts. The term laissez-faire is French for "let you do," which, applied to economics, means that individuals and businesses are allowed to freely engage in commerce. This idea becomes meaningful when one realizes that governments often regulate or restrict certain aspects of commerce, as regulation and restriction are the opposite of laissez-faire. Regulation/restriction and laissez-faire are mutually exclusive, so that, by regulating a product or industry, we do not allow individuals and businesses to operate "freely" in the marketplace. However, many modern economies have mixtures of freedom and restriction, so that few - if any - modern economies are purely one or the other. For example, our economy is said to be "capitalism," a system in which only the availability of resources and the extent of customer demand are supposed to determine whether something is created and sold. Nonetheless, we know that our system includes various restrictions and regulations. Our so-called capitalism is not pure, but is a blend of capitalistic ideas, along with regulations/restrictions on imports, exports, certain foods and drugs, farm products, fuels, chemicals, etc. It does not matter if there is good reason for the restrictions and regulations, as their mere existence is enough to counter laissez-faire. A so-called "socialist" economy, such as in China, still has some capitalistic elements, such as private ownership of certain production and resources and ability of certain businesses to retain and accumulate wealth. Most modern economies are various blends of capitalism (or laissez-faire) and socialism. Pure socialism includes government ownership of all business resources and complete control over all economic activity, but it is not likely that such an economy is actually in operation today. Thus, an argument is born: How much market freedom is wise? How much regulation/restriction is possible before the overall economy is harmed? For politicians, this is difficult and complicated, as no one is capable of accurately predicting the future. We are often at odds with our representatives regarding economic decisions because we are more-or-less free to learn, understand, and act according to our own self interest - and we elect those representatives. So-called socialist countries enjoy less such freedom and their people possibly have little or perhaps restricted access to accurate information, so there can sometimes seem to be more solidarity among socialist citizens. Generally, businesses favor laissez-faire policies, as such policies are favorable to business operations, profits, and growth, while governments tend to favor regulation/restriction, in order to protect consumers and the environment, conserve resources, and boost government revenues. Businessman Herbert Hoover was a president considered laissez-faire, and you can learn about his troubles with congress in order to get a clearer picture. Ronald Reagan, while not himself a businessman, nonetheless supported and enacted the advice of his business advisors. Reagan's "Trickle Down Economics" or so-called "Voodoo Economics" was based upon the laissez-faire concept. Current president Donald Trump, a long-time businessman and non-politician, will probably prove to also be a laissez-faire president, and the modern Libertarian Party has traditionally supported laissez-faire policies. Please look up some of the terms and ideas I've presented here - I'm sure they can lead you to greater understanding. Good luck!