How are functions of Government Distributed?
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How are functions of Government Distributed?
How are functions of Government Distributed?
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Answer:
Virtually everything that a government does has some effect on the distribution of income or wealth at the various levels of society. Improvements in health care facilities benefit the sick, the old, and those about to have children.
Explanation#1:
The government transfer payments from one citizen to other through taxation policy. Example: Old age pensions, Social sector initiatives for the poor. Through these programs, the government provides income support to those individuals who do not have any source of earnings.The government distributes the resources in a judicious way so as to meet the needs and common interests of the society. The government works for the benefit and betterment of all because resources are not the sole property of a particular person or community but they belong to everyone.
Explanation#2:
Externalities are probably the argument for government intervention that economists most respect. Externalities are frequently used to justify the government’s ownership of industries with positive externalities and prohibition of products with negative externalities. Economically speaking, however, this is overkill.
Explanation#3:
The federal government has increasingly assumed responsibility for reducing poverty in America. Its primary approach is to expand programs that transfer wealth, supposedly from the better off to the poor. In 1962, federal transfers to individuals (not counting payments for goods and services provided or interest for money loaned) amounted to 5.2 percent of gross domestic product, or 27 percent of federal spending (Stein and Foss 1995, p. 212). By 2000, federal transfers had increased to 10.9 percent of GDP, or approximately 60 percent of federal spending; GDP was $9.82 trillion and federal spending was $1.79 trillion. These transfers are commonly referred to as government redistribution programs, presumably from the wealthy to the poor. The unstated implication is that income was originally distributed by someone. But no one distributes income. Rather, incomes are determined in the marketplace by millions of people providing and purchasing services through voluntary exchanges, and government transfers necessarily limit these exchanges….
… Such an examination yields a striking fact: most government transfers are not from the rich to the poor. Instead, government takes from the relatively unorganized (e.g., consumers and general taxpayers) and gives to the relatively organized (groups politically organized around common interests, such as the elderly, sugar farmers, and steel producers).