The Role of Government in the Economy: How to Write the Paper
Four examples — two you support, two you don’t. That sounds simple until you’re staring at a blank page trying to figure out which agencies to pick, how to structure the pros-and-cons analysis, and what “critique the political process” actually means. This guide walks you through it step by step.
The debate about government’s role in the economy is one of the oldest in economics. And it’s genuinely unsettled. Reasonable economists disagree — not because the facts are unclear, but because the tradeoffs are real. Your paper isn’t asking you to resolve the debate. It’s asking you to pick four specific examples, think carefully about what they do and don’t accomplish, and make an evidence-backed argument about two you’d keep and two where the market would likely do better. The challenge is making that argument specific and honest — not just picking sides and hunting for quotes to back it up.
What This Guide Covers
Understanding What the Assignment Actually Asks
Read the prompt again. It asks for four things about each of your four examples: assess the pros and cons, state whether you agree with the intervention (and why), explain your rationale thoroughly, and critique the political process for each one. That’s four analytical tasks per example, across four examples. In 3–4 pages.
The assignment explicitly says not to use the EPA since it’s given as an example. But pay attention to how it’s used — one agency can give you material for both agree and disagree examples (certain EPA regulations you’d support, others you’d challenge). That same logic applies to agencies you do choose. The FDA, for instance, could legitimately appear on both sides of your paper depending on which specific regulations you’re analyzing.
The Economic Framework: Why Government Intervenes
Before picking your examples, you need a framework. The standard economic case for government intervention rests on market failures — situations where free markets, left alone, produce outcomes that are inefficient, unfair, or unstable. There are four main types.
| Market Failure Type | What It Means | Classic Example | Government Response |
|---|---|---|---|
| Public Goods | Non-excludable, non-rival goods that private markets won’t produce in sufficient quantity because no one can be charged for using them | National defense, basic research | Direct government provision or funding |
| Externalities | Costs or benefits imposed on third parties not involved in the transaction — positive or negative spillovers the market ignores | Air pollution (negative), vaccines (positive) | Taxes, subsidies, regulations, cap-and-trade |
| Information Asymmetry | One party in a transaction knows significantly more than the other, creating problems of adverse selection and moral hazard | Drug safety, financial products, used cars | Disclosure requirements, licensing, product standards |
| Market Power / Monopoly | When a single firm or small group controls a market, they can set prices above competitive levels and restrict output | Utilities, telecom, healthcare systems | Antitrust enforcement, rate regulation, public options |
Your “agree” examples should map clearly to one of these market failures. If you’re arguing for government intervention, the strongest position is: here’s the specific market failure, here’s why the market can’t fix it alone, and here’s the evidence that the intervention corrects it without creating worse distortions. Your “disagree” examples should argue either that no genuine market failure exists, that the intervention overcorrects it, or that the cure (regulatory burden, reduced competition, higher prices) is worse than the disease.
The case against intervention isn’t just “government bad, market good.” It’s more precise than that. Government failure happens when intervention produces worse outcomes than the market failure it was supposed to fix — through regulatory capture, unintended consequences, bureaucratic inefficiency, or political distortion. For your disagree examples, argue from government failure, not just free-market ideology. That’s a stronger and more academically defensible position.
How to Pick Your Four Examples
Don’t just Google “government agencies” and pick the first four that come up. Pick examples where you can make a specific, evidence-backed argument — and where the political influence angle is documented enough to write about concretely.
Pick Specific, Not Vague
“The FDA” is vague. “FDA pre-market drug approval requirements under 21 CFR Part 314” is specific. The more specific your example, the easier it is to find evidence — and the more credible your analysis looks. Broad agencies give you nothing to grip. Specific regulations give you data.
Have a Real Position
Don’t pick agencies just because they sound economically significant. Pick ones where you actually have an argument — where you can explain why the intervention does or doesn’t correct a real market failure. Forced, wishy-washy positions produce weak essays. The professor wants to see critical thinking, not a neutral summary.
Find the Politics First
Before committing to an example, check whether there’s documented lobbying activity, revolving-door personnel, or documented political distortion. If you can’t find political influence data on an agency, the political critique section will be thin. OpenSecrets.org and the FDIC’s own regulatory comment databases are useful starting points.
Examples You Could Argue For
These are agencies or regulations where a genuine market failure exists and the intervention has documented benefits that outweigh the costs — giving you a defensible “I agree this is necessary” position.
Federal Deposit Insurance Corporation (FDIC)
The FDIC insures deposits up to $250,000 per depositor, per bank. The market failure it addresses is a classic one: without deposit insurance, individual depositors face a rational incentive to run on any bank showing signs of stress — which creates a self-fulfilling crisis even at solvent institutions. The economic rationale is solid. Bank runs are an information and coordination failure. Before the FDIC was created in 1933, the U.S. experienced repeated banking panics that wiped out ordinary savers and crashed the broader economy. Since the FDIC’s founding, there has not been a single instance of an insured depositor losing money on an FDIC-covered account.
Pros: Eliminates systemic bank run risk, stabilizes the banking system, protects small savers who lack the sophistication to evaluate bank balance sheets. Cons: Creates moral hazard — banks know deposits are guaranteed, which can encourage riskier lending. Insurance premiums don’t always fully price that risk. Political angle: The banking industry has historically lobbied to keep FDIC coverage limits high (expanded from $100K to $250K during the 2008 crisis) because broader coverage keeps depositors from pulling funds. Track campaign contributions from the American Bankers Association via OpenSecrets.org for specific data.FDA Pre-Market Drug Approval Requirements
Before a pharmaceutical drug reaches market in the U.S., the manufacturer must demonstrate safety and efficacy through clinical trials reviewed by the FDA. The market failure is severe information asymmetry — patients cannot evaluate drug safety on their own, and without mandatory testing requirements, pharmaceutical companies have financial incentives to overstate benefits and understate risks. The historical case is stark: Thalidomide, a sedative widely prescribed in Europe for morning sickness in the late 1950s, caused severe birth defects in thousands of infants. The U.S. was largely spared because FDA reviewer Frances Kelsey refused to approve the drug without more safety data.
Pros: Corrects a severe information asymmetry, prevents harmful drugs from reaching market, builds public trust in pharmaceuticals. Cons: The approval process averages 10–15 years and costs hundreds of millions of dollars per drug — which prices smaller biotech firms out of drug development, reduces competition, and delays patient access to potentially life-saving treatments. Political angle: Pharmaceutical companies lobby heavily to extend patent protections and influence FDA user fee structures. The Prescription Drug User Fee Act (PDUFA) funds a large portion of FDA drug review through fees paid by the industry being regulated — a structural tension worth analyzing.Examples You Could Argue Against
These are regulations where the evidence suggests the intervention either doesn’t fix a genuine market failure, creates significant costs that outweigh the benefits, or primarily serves entrenched interests at the public’s expense.
Certificate of Need (CON) Laws
Certificate of Need laws require healthcare providers — hospitals, surgery centers, nursing homes — to obtain state government approval before expanding capacity, buying major equipment, or opening new facilities. The original justification was preventing “duplication” of expensive healthcare resources. In practice, the laws function as government-enforced barriers to entry. Existing hospitals apply for and receive approval to block competitor facilities. The Federal Trade Commission and the Department of Justice issued a joint report concluding that CON laws impede competition, reduce access, and raise prices without improving quality. More than 35 states still have some form of CON regulation.
Pros: Theoretically concentrates patients in high-volume facilities (better surgical outcomes for complex procedures), prevents oversupply in markets with limited insurance reimbursement. Cons: Extensive evidence that CON laws reduce hospital beds, limit access to care in rural areas, raise prices, and protect incumbent providers from competition with no clear quality benefit. Political angle: Hospital industry lobbying to preserve CON laws is one of the clearest documented examples of regulatory capture in healthcare. Incumbent hospitals fund campaigns of state legislators who sit on the committees overseeing CON approvals. The FTC has documented this conflict explicitly in its comments to state legislatures.The Jones Act (Merchant Marine Act of 1920)
The Jones Act requires that cargo shipped between U.S. ports be carried on ships that are U.S.-built, U.S.-owned, U.S.-flagged, and crewed by U.S. citizens or permanent residents. The stated rationale is maintaining a domestic shipbuilding base for national security. The actual effect is to make domestic water shipping dramatically more expensive — which increases costs for U.S. territories like Puerto Rico and Hawaii, raises consumer prices on goods, and suppresses competition. After Hurricane Maria devastated Puerto Rico in 2017, the Jones Act prevented foreign-flagged ships from delivering aid directly, requiring a temporary federal waiver.
Pros: Supports domestic shipbuilding jobs and theoretically maintains a merchant fleet available for military logistics in wartime. Cons: The U.S. shipbuilding industry is globally uncompetitive; Jones Act ships cost 2–5 times more to operate than foreign-flagged vessels. The cost is borne by consumers in island territories with no alternative freight options. The economic literature largely finds that the national security justification doesn’t hold — the U.S. military relies far more on air transport and its own logistics than civilian merchant vessels. Political angle: The Jones Act survives entirely because of lobbying from domestic shipping companies, longshoremen’s unions, and shipbuilders. Every congressional attempt at reform has been blocked by a narrow coalition of industry groups with concentrated interests overwhelming diffuse consumer opposition.You’re not limited to these four. Other well-documented options include: Agree: The Securities and Exchange Commission (SEC) — addresses information asymmetry in capital markets; Consumer Financial Protection Bureau (CFPB) — addresses predatory lending and financial product complexity. Disagree: Occupational licensing for low-risk professions like hair braiding or interior design — documented in a 2015 Obama White House report as competition-reducing with no safety benefit; Sugar import tariffs and domestic price supports — transfer income from consumers to politically connected agricultural producers with no market failure justification. Pick examples that interest you and where you can find solid sources.
How to Assess Pros and Cons for Each Example
The worst version of this section is a generic list: “Pro: protects consumers. Con: costs money.” That’s not analysis. Here’s what a real pros-and-cons assessment looks like.
Name the Market Failure the Intervention Addresses
What problem was this intervention designed to solve? Is it a real market failure (externality, information asymmetry, public good, monopoly power) or a political choice dressed up as economics? Starting with this question gives your pros section an economic foundation rather than a values statement. “The FDIC addresses the systemic coordination problem that makes individual bank runs rational even at solvent institutions” is a pro rooted in theory. “The FDIC is good because it protects people” is not.
Assess Whether the Intervention Actually Fixes the Failure
This is the heart of the analysis. Does the intervention correct the market failure it was designed for? Does it do so efficiently? Does the evidence show it works? A regulation can be justified in theory and still fail in practice. The FDA approval process is theoretically justified — but if it’s so slow and expensive that life-saving drugs sit in clinical trial limbo for a decade, the question is whether the benefit of caution outweighs the cost of delay. Use data. The FDA’s own Drugs@FDA database tracks approval timelines.
Identify the Costs — Including the Ones That Don’t Show Up on a Budget
Every intervention has direct costs (agency funding, compliance expenses) and indirect costs (reduced competition, slower innovation, higher consumer prices, misallocated resources). The indirect costs are where your cons section should spend most of its time. They’re also where the economics gets interesting. CON laws cost almost nothing to administer — the harm is entirely in the competition they suppress and the prices that result.
Compare Counterfactuals: What Would the Market Do Instead?
For your disagree examples especially, you need to say what happens without the intervention. “The free market would provide better” is not enough. Better how? At what price? With what information? The Jones Act argument, for example, is strengthened by pointing to the actual cost differential between Jones Act shipping and comparable foreign-flagged routes — which is documented in academic and government research.
Critiquing the Political Process for Each Example
This section trips up a lot of students. “The political process influences this agency” is almost content-free. You need to be specific: who lobbies, what they want, what they got, and how that differs from the public interest.
Most regulatory politics follows a simple pattern: a small group with large stakes per member (an industry, a union, a profession) organizes effectively and lobbies for rules that benefit them. The costs fall on a large, diffuse group (consumers, taxpayers) where the harm per person is too small to motivate organizing. The Jones Act is a textbook example. The domestic shipping industry has a large concentrated interest in keeping it; every U.S. consumer pays fractionally higher prices on imported goods without knowing why.
Use OpenSecrets.org for lobbying expenditure data, campaign contribution records, and industry PAC activity. If you’re writing about the FDIC and moral hazard, look up American Bankers Association lobbying totals. For CON laws, look at state hospital association political expenditures. Specific numbers are far more persuasive than general claims about “industry influence.”
Regulatory capture — where the agency meant to regulate an industry ends up serving that industry’s interests — is one of the most documented phenomena in public choice economics. Nobel laureate George Stigler formalized it in his 1971 paper “The Theory of Economic Regulation.” For the FDA, the revolving door between FDA staff and pharmaceutical companies is well-documented. For the FDIC, the question is whether deposit insurance limits get set by public interest analysis or by banking industry lobbying. Use the concept explicitly — it shows you’re engaging with the economic literature, not just describing the politics.
Don’t just say lobbying happens. Say what specific policy outcome lobbying produced. “Pharmaceutical companies spent $X lobbying for PDUFA reauthorization in [year], and the resulting fee structure gave industry greater influence over FDA review timelines” is a specific claim. “Pharmaceutical companies lobby the FDA” is not an argument. The assignment asks you to critique — not just observe.
Paper Structure: Introduction Through References
Three to four double-spaced pages is not much room. You have roughly 825–1,100 words of body text after title page and references. Each of your four examples gets about 200–250 words. That means every sentence does work.
Introduction (150–175 words)
Open with a sentence that frames the debate — not a dictionary definition of government, not a broad historical claim, but the actual tension: where does the market’s efficiency end and the government’s necessary role begin? Then give two to three sentences of context: the spectrum from laissez-faire to heavy intervention, and the fact that this paper evaluates four specific examples. End with your thesis — which examples you’ll support, which you’ll oppose, and the economic criteria you’ll use to evaluate them. The thesis should be the last sentence of the introduction.
Body: Two “Agree” Examples (400–500 words total)
Give each example a subheading if your professor allows it — otherwise use topic sentences that clearly signal which agency you’re discussing. For each one: name the intervention and what it does, identify the market failure it addresses, assess pros and cons with evidence, state your position, and critique the political influence. Keep the political critique to two or three sentences per example — enough to show you’ve thought about it, not so much that it overwhelms the economic analysis.
Body: Two “Disagree” Examples (400–500 words total)
Same structure as the agree section. The key difference in tone: your pros section for disagree examples should still be honest — acknowledge the stated rationale and any genuine benefits. Then argue that the costs outweigh the benefits, or that the free market would produce better outcomes. A disagreement essay that acknowledges no merits in the opposing view isn’t critical thinking — it’s a polemic. The professor wants to see you weigh evidence, not just argue a side.
Conclusion (100–125 words)
Restate your thesis in different words. Summarize what your four examples reveal about when government intervention is and isn’t justified — not just for your specific agencies, but as a broader principle. What criteria would you use to evaluate any proposed government intervention? That’s the kind of generalization that turns a good paper into an excellent one. Don’t introduce new examples or new evidence in the conclusion.
Writing the Thesis Statement
The assignment specifies that your introduction must end with a clear thesis statement. A thesis for this paper has to do more than list your four examples. It should state your evaluative framework — the economic logic you’re using to decide when intervention is justified and when it isn’t.
Where to Find Credible Sources
You need at least seven credible sources beyond the course text. Here’s where to find them, by type.
Congressional Budget Office (CBO) and GAO
Both publish nonpartisan economic analyses of federal programs and regulations. The GAO has published reports on CON laws, FDA drug approval timelines, and Jones Act costs. Free at gao.gov and cbo.gov.
Federal Reserve Economic Data (FRED) and Fed Working Papers
FRED at fred.stlouisfed.org provides macroeconomic data. Fed working papers (not peer-reviewed but credible) cover banking regulation, FDIC moral hazard, and financial stability. Use as supporting data sources.
Brookings Institution and Cato Institute
Brookings leans center-left; Cato leans libertarian. Using both signals intellectual balance. Cato has extensive Jones Act and CON law research. Brookings has strong work on FDA reform and financial regulation.
Journal of Economic Perspectives
Accessible to non-specialists. Regularly publishes reviews of government regulation research. JSTOR and Google Scholar provide access. The AEA website has free JEP articles at aeaweb.org/journals/jep.
OpenSecrets.org
The Center for Responsive Politics tracks lobbying expenditures, campaign contributions, and revolving-door employment. Searchable by company, industry, and bill. Specific figures from here make the political critique section concrete and credible.
Forbes: Monetary Policy Overview
The assignment requires you to review the Forbes article on monetary policy at forbes.com/advisor/investing/monetary-policy/. This counts as one of your credible sources if cited — it covers how the Federal Reserve uses interest rates and money supply to manage the economy, relevant background for the macro context of your paper.
APA Format Requirements
Title Page Requirements
- Title in bold, centered, in the upper half of the page
- One blank line between the title and the remaining information
- Student’s name, institution name, course name and number, instructor’s name, due date — each on its own line, centered, not bold
- No running head required for student papers in APA 7th edition
- Page number in top right header, starting at page 1 on the title page
In-Text Citations
- Author-date format: (Smith, 2023) or Smith (2023) depending on sentence structure
- For direct quotes, add a page number: (Smith, 2023, p. 45)
- Government reports: use the issuing agency as author — (Congressional Budget Office, 2022)
- For websites: use the organization name as author if no individual author — (Federal Trade Commission, 2023)
- Every citation must appear in the references list; every references entry must appear as a citation
References Page
- Starts on a new page after the conclusion; centered heading “References” (not bold, not in quotes)
- Double-spaced throughout with hanging indent (second line of each entry indented 0.5 inches)
- Alphabetical by first author’s last name
- For websites, include the URL and the date accessed is not required in APA 7 unless the content changes frequently
- DOI numbers for journal articles when available; use https://doi.org/[doi] format
Body Formatting
- Double-spaced throughout, including between paragraphs (no extra spacing)
- 12pt Times New Roman, Calibri 11, or Arial 11
- 1-inch margins on all sides
- First line of every paragraph indented 0.5 inches
- Avoid overuse of direct quotes — the assignment explicitly penalizes this. Paraphrase and cite instead. Quotes should be reserved for language where the exact wording matters
Mistakes That Lose Points
Picking the Same Side for All Four Examples
The assignment explicitly requires two examples you agree with AND two you disagree with. Picking four agencies you support — or four you oppose — doesn’t fulfill the assignment. Read the prompt carefully before committing to your examples.
Split 2–2 and Make Each Argument Genuine
Your agree and disagree examples should reflect real analytical positions. If you find yourself arguing against an agency you actually think is necessary, pick a different example. Forced arguments produce weak analysis. Pick examples where you have something real to say.
Skipping the Political Influence Critique
“Lobbying exists for this agency” is not a critique. The assignment asks you to critique the political process for each example. That means naming specific actors, identifying what they lobbied for, and explaining how it affects the policy outcome.
Use OpenSecrets Data and Name Specific Groups
“The American Hospital Association spent $X lobbying state legislatures to maintain CON laws, protecting incumbent hospitals from new competition” is a specific critique. It names who, what, and why — and it connects political behavior to the economic outcome you’ve already analyzed.
Using Direct Quotes Instead of Analysis
The assignment explicitly warns against over-reliance on direct quotes. A paper padded with long block quotes from government reports and journal articles will lose points. The professor wants your analysis — your interpretation of what the evidence means, not a collection of other people’s sentences.
Paraphrase and Add Your Own Interpretation
Paraphrase source material in your own words, cite it, and then add a sentence of your own that says what it means for your argument. “According to the FTC and DOJ’s joint report (2023), CON laws reduce competition without improving quality — which suggests the intervention fails its own stated rationale” does more analytical work than any direct quote from that report.
Vague Pros and Cons Like “Creates Jobs” or “Costs Taxpayers”
“This regulation creates jobs” and “this regulation costs taxpayers money” apply to almost every government action. They’re not analysis. They’re noise. If you can’t say how many jobs, at what wage, and relative to what alternative use of those resources, don’t say “creates jobs” at all.
Use Economic Concepts — Deadweight Loss, Moral Hazard, Regulatory Capture
Your macroeconomics course gives you a vocabulary for this. Use it. “FDIC insurance creates moral hazard by shielding banks from the full consequences of excessive risk-taking” is analytically precise. It uses an economic concept correctly and connects it to the specific mechanism of the policy.
The assignment header explicitly warns that the institution will check for plagiarism. Every factual claim borrowed from a source — statistics, research findings, policy descriptions — needs an APA in-text citation, even when paraphrased. Paraphrasing without citation is still plagiarism. For guidance on citation practice and how to avoid accidental plagiarism, see Citing Sources and Avoiding Plagiarism: What Every Student Needs to Know.
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Economics Homework Help Get StartedWhy This Assignment Is Worth Taking Seriously
The role of government in the economy isn’t abstract. Every one of the regulations you’ll write about affects real prices, real access, and real outcomes for real people. The Jones Act isn’t just a policy debate — it’s a direct reason why a shipping container from the U.S. mainland to Puerto Rico costs more than the same container shipped to a foreign port. CON laws aren’t just a regulatory philosophy question — they’re why rural counties in 35 states have fewer hospital beds per capita than counties where those laws don’t exist.
Your paper doesn’t have to resolve the debate between market and government. But it should leave the reader with a clearer picture of how to evaluate that question — what evidence matters, what the tradeoffs look like, and how politics shapes outcomes in ways that often have nothing to do with economic efficiency. That’s what good macroeconomic reasoning looks like in practice.
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