In Germany in 2009 there was considerable debate about the
extent to which the government should be intervening in the economy. For
example, its citizens were worried about the future of Opel, a German car brand
that was part of the ailing General Motors. Some wanted the government to make
sure jobs were saved no matter what. Others, however, were more hesitant and
worried about becoming the government becoming too interventionist.
Traditionally since the Second World War the German government has seen itself
as a referee in market issues and has avoided trying to control parts of the
economy. It would regulate anti-competitive behaviour, for example, but not try
to run many industries. However in the recession of 2009 when the economy was
shrinking the government was forced to spend more to stimulate demand and had
to intervene heavily to save the banking sector from collapse. The government
also had to offer aid to businesses to keep them alive.
Questions
1. What are the possible benefits of a government
intervening in an economy?
2. What are the arguments against government intervention in
an economy?
3. What prompted greater intervention by the German
government in 2009?
4. What would determine whether the German continued to
intervene on this scale in the future?
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