3.3.7 Targeted Government Interventions

Most political control of the economy is directed towards the whole of the domain being governed, but sometimes governments target a particular area for different treatment if it has a high political profile.  The politicians are trying to achieve a specific political effect on the target area, with varying degrees of effectiveness, but all such interventions have adverse economic consequences elsewhere and unintended side-effects.

There are four patterns of intervention considered here:

●  Governments can intervene to support a specific industry or region (; this might be effective for a while, but it doesn’t address the underlying reason why the help was needed and it diverts resources from elsewhere in the economy.

●  They can apply sanctions or tariffs, or give economic aid, to other countries (  Such actions vary in their political effectiveness, but they all place a burden on the economy of the country that uses them.

●  They can manipulate their decisions to attract political donations from specific individuals or organisations (  The donors are seeking to benefit by persuading the politicians to distort economic policy, which is undemocratic and is often suboptimal for the economy as a whole.

●  A government can strike ad hoc deals with companies, using its power as a bully to get its way (  This undermines the framework of rules that govern an economy, ultimately increasing the cost of doing business.



Next Section

This page is intended to form part of Edition 4 of the Patterns of Power series of books.  An archived copy of it is held at https://www.patternsofpower.org/edition04/337.htm