Alan Krueger, an economist at Princeton University who served as chair of the Co

Question

Alan Krueger, an economist at Princeton University who served as chair of the Council of Economic Advisers in the Obama administration, has argued that Adam Smith "... worried that if merchants and manufacturers pursued their self-interest by seeking government regulation and privilege, the invisible hand would not work its magic .." Source Alan B. Krueger, "Rediscovering the Wealth of Nations," New York Times, August 16, 2001. What types of regulation and privilege might merchants and manufacturers seek from the government? How might these regulations and privileges keep the invisible hand from working? Step 1: Review the chapter material. Step 2: Answer part a. by describing the economic system in place in Europe in 1776. Step 3: Answer part b. by contrasting the behavior of merchants and manufacturers under a guild system and a market system.

Explanation / Answer

1.

National Governments can offer protection not only in areas of defense. The Government can also pass laws that make the national government stable. Enact laws which give free enterprise a chance to work, as well as offer protection to the workers who handle the labor.

In short a strong national government can guarantee merchants and manufacturers a place for their business, workers to make the business work, and a market for the business.(usually in our earlier years the very people who manned the plants and shops were also usually the only customers who made it all possible.

2.

These regulations would offer businesses a safety net in a certain way. The government regulations would protect bad businesses and they would last longer. For instance if a business kept its prices high, government price protection would help the business live until eventually people would stop buying the expensive items from the said business. Please Rate. Noticed you had posted this multiple times.

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