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Free «Local Government Influence in British Cities» Essay Sample

Introduction

Various governments and systems adopt a variety of markets. Every government or a system concerned is accountable for selecting it’s favored market system (Heppell, 2002, p. 302). Despite the liberty to select any market system, most of the governments around the globe have adopted the free enterprise economy. The system has been experimented and has thoroughly proved to give the best methods and ways of managing resources and controlling wealth. The free enterprise economy bestows the authority of possession and management of resources and other capital goods to the persons.  In a free enterprise economy, all means of productions are given to individual with no or little government control or intervention. Any government intervention is obviously defined and often complies with the constitutional provisions. 

At times, though, government policies may change, hence resulting in variations in regulations or market system. Britain is one such example who witnessed it when the conservative government came in 1975 and rules up till 1997. During this tenure, Britain was dominated by conservatives’ economic policies. (Heppell, 2002, p. 301).  Adoption of neoliberal policies was followed with full enforcement during this period. This period witnessed less government intervention in economic market, less spending on welfare services and rise and growth of private ventures. 

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These features are actually the core of neoliberal economy. Many different considerations are kept in mind before selecting a system or a government and the market type to adopt. This is obviously because of the advantages and limitations that follow from any choice made. Whatever the choice, government always plays a crucial role in shaping the direction of a country’s economic success. As such, this paper highlights the role of the British government’s involvement in the society, in the building of environment and economy. 

Economy

The British government has been undoubtedly keenly involved in shaping the country’s economic directions in multiple ways. Under the stewardship of the conservatives, many economic strategies have been tilted towards neoliberal economy. The major tool used for economic strategies is taxation. By applying taxation, the conservatives have succeeded in keeping their strategies on track. In enterprise zones, for example, the government has lowered taxes to promote establishment of new ventures, and to give a boost to existing ones. For the enterprises that are already established and do not need government support to stay afloat, for them tax concessions has been applied.  The system has thoroughly supported enterprise agencies and corporate financing and the government monitor these agencies closely. On the other hand, local economic policies operate a free will and are beneficial to local business. To increase output, to improve market efficiency, and to liberalize the markets the government initiates the agency program and the local economic programs. (Brady, 2009, p. 463) .the pros of increases efficiency and enhanced output cannot be overstated. Overall economic growth, increased profitability of firms and employment opportunities all depend on two factors. 

It is through deliberations and dispute resolution that the government is involved in market operations. The availability of dispute resolution agencies booms a market and provides an encouraging environment and confidence for business interactions {Jaffer & Thompson (1986)}. Any infringements, misunderstandings or disputes that may occur are always easily resolved with the existence of a well structural judicial system or a dispute resolution agency. The role of implementation of justice can only be at the hands of the government because of its importance and cannot be at the hands of any individual or an organization. Above all, people will certainly feel safe in the hands of the hands of the government. Whatever the type of the market is adopted by the government, its administration of justice and role of deliberations must be full throttle. Fluctuations are the market characteristics. Free markets are popular for these fluctuations which end up in massive losses. If not regulated properly, chaos may arise which may have negative impact on the economy. 

The interference of the United Kingdom’s government on financial sector was predisposed by several factors including both positive and negative. It was the number of scandals that hit the country in late 1970s and 1980 which made mandatory for the government to interfere. These scandals were an alarm for the government to interfere and save the innocent citizens from corrupt business individuals and to create an equal playing field for all businesses. The sector which compelled the government in to interfere was the insurance where pension schemes were mismanaged and endowment misused, and other capital investments which were equally mishandled.

Had not the government interferes, these scandals would have brought the economy to its knees. Keeping in consideration such scandals, the interference of the government becomes necessary. While there must be many people who will consider government interference unwarranted, for them the latest LIBOR scandal will justify the importance of government intervention. In this day and age, investors take their time to study financial records and company records before investing their hard earned capitals. Such data is available in company postings. 

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Although all figures in the posting are fundamental, only a small number of ratios indicate industry ranking and company’s financial position. One such ratio is LIBOR. It shows a firm’s financial position, thereby becoming a important decision indicator for financiers. It is for this purpose that commercial banks venture on a scheme to manipulate LIBOR to attract stakeholders and investors. Soon the trouble sprung into a complete scandal sending panic waves across the globe.

The scandal not only affected the reputation of the financial banks, but it also affected the entire financial market. After the news of the scandal had spread, there was worry and tension among the customers in the financial sector, and they started wondering if they had suffered fraud. It seemed highly probable that this had been the case because of the wide scope of LIBOR. The LIBOR index has a huge financial value around the world because it incorporates “corporate debt, mortgages, student loans, interest rate and currency swaps, and other derivatives” (Joint Economic Committee, 2012). The aforementioned scandal extracted more money from the lenders than was expected. After this horrible scandal had emerged, it was very likely that households would become suspicious of financial institutions and this mistrust may go on for many years, which at the same time would affect financial institutions and banks adversely. While this is a modern scandal, it also reinforces the fact that sometimes government intervention is crucial to prevent frauds. 

Through government intervention, it is possible to restore order and to end any corruption in business activities. Therefore it should not be misunderstood by the people who are opposed to the idea of government intervention. Some people may justify the role of the government to regulating financial services market because of the recent development in the sectors, but they do not seem to justify government intervention in other sectors. We have seen over the years that government has always acted within the interests of its citizens. For instance in the 1980s it was seen that the government had come tasked the Wilson Committee in order to find out the challenges faced by the financial and come up with strict regulative policies to resolve those challenges. The findings of the committee were porous, so another committee was assigned to complete the task. This time however it was seen that the committee’s head was Professor Gower. In order to arrive at conclusions and recommendations, the issues faced by the financial market were explored in 3 perspectives. 

First of all, the committee determined and put forward the existing laws and policies related to statutory investor protection. Then the committee focused on the mechanisms through which investment can be controlled. Lastly, the progress of EEC (Jaffer& Thompson 1986) was noted. The final conclusions of the committee have played an important role of the Britain’s market over the years. Through them, there has been incorporated the need for segmentation for product market, restricted industry membership, the enlisting of the building of friendly societies  and the assumption of the clearance role for all banks issued by the Central Bank of England. 

Built environment

The British government has played a crucial role in built environment activities. Land may perhaps be the most essential and most valuable resource to any government. For this reason, the government has always tried to lay down those policies and regulations which aid in the best utilization of this important resource.

 
 
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The government’s policies related to land also focus on incorporating the local authorities in land planning, though they may be weak and powerless. Through the funding provided by the central government, the tracks of lands that were once inhabitable were also developed. This process was also aided by the establishment of Enterprises Zones and Urban Development Corporations. The role of the local authorities was also significant throughout because it aided them to directly interact with the investors. The investing decision of the investors is influenced by various factors. It is natural that investors want to invest in those areas which are safe, easily accessible, near potential market, having the supply of social amenities such as water, electricity and health centers, and also spacious enough to undergo further expansion. In dilapidated areas, there are only little of these services, and thus investors are also unsure of investing in these areas. In instances like these, the local authorities that were put forth by the government played active roles, and they had a considerable share in facilitating urban regeneration by developing the land and improving the social amenities that may be crucial to the development of a successful business.

Every year, there is a review in the expenditure by the government where the expenditures that are influenced by several market factors such as inflation, depression, exchange rate and FDI are analyzed. In 1983, there was a cut in the overall government expenditure and because of this there were many projects that had to suffer because of lack of money. Due to this cut, the housing expenditure was also affected and due to which many projects around Britain were halted by the local authorities. Paradoxically, there was a rise in the demand for housing which caused an acute shortage of housing and thus led to a steep rise in housing rent. Due to the excessive demand, the private investors were attracted towards the prospect, and soon there was building of houses for rent which actively competed against the local authorities who had done this faithfully for past so many years. Therefore, the consequences were that there was a decrease in the involvement of built environment by the local authorities and the central government. The responsibility for building houses fell mostly to the market forces. 

Because the private investors demanded higher profits, there was an increase in the pricing for acquiring houses. The quality of building was also made to suffer because the contractors seemed to be rushing to build as many housing units as they could to earn more money. This situation called for the need of government intervention, because it was the responsibility of the government to ensure that the prices were regulated, that there was no compromise on the quality of services and more importantly, the government was responsible for monitoring the activities in the housing society and responding to them appropriately. 

The real property market is often susceptible to lows that are called bubbles. Speculative bubbles can lead to substantial losses to innocent citizens, and in such cases the government may need to intervene. Increased demand leads to increase in prices of property, and so does the surges in construction. When speculation also comes into place, then the prices of property increase without there being an actual increase in demand. When the demand is less than construction then a speculative burst occurs and can lead to considerable disarray. It is the responsibility of the government to protect against this. In 2008, there was such a case in the USA, and the burst had an overall impact on U.S economy as well as the global economy. 

Security

Security is the top priority of all citizens, and therefore it is the primary responsibility of any elected office to provide security to its people against any negative economic market effects. The role of the British government is remedying these challenges has been quite noticeable. There are various risks to financial institutions from various quarters such as equity investment, market, liquidity, and operational risks. These risks can cause a downward plunge of financial situations any time, so there is a need for closer monitoring and regulation on behalf of the government. 

Every investor wants to be assured that their investment is safe, and in case of losses they will be compensated. This is where the government’s role comes into action to provide insurance against any risks. While the regulations and policies differ from institution to institution, the government intervention is still necessary. Not only the government can employ actions that regulate the financial scenario, but they may also remove the barriers that are interfering with normal market operations.

Removing market barriers helps the regulated firms in learning to prevent risk and it also generally helps the society in being safeguarded from corrupt business activities and unforeseen risks. 

Trade regulation is another important aspect which the government exploits society. Boundaries between countries have been surpassed and the world is now changing into a global village as cultural diversity, religion, race and ideological differences are disappearing and people have become more tolerant to these differences. The evidence of this change lies in the free flow of capital and labor among nations. Globalization has lead to unrestricted trade among nations (Castree, 2010, p. 188). While there are many benefits of globalization, there may also be certain negative effects, and in order to protect the society from negative effects, there is a need for government monitoring and regulation. While excessive attempts taken by government can be misinterpreted to as harassing international businesses, thus monitoring international trade becomes a complex procedure. On the other hand, there are numerous benefits associated with it such as FDI growth, foreign earnings, variety of products, and contribution to GDP. The only thing to ensure is that only those trade agreements that bear positive results to the society must be encouraged, not those that bear positive results just to other businesses. The benefits borne to the society are of much more importance than those benefits brought to individual businesses. 

The role of neoliberal strategies in promoting social growth and development has been investigated for many years, especially in the countries where it has been implemented. For example in the U.S, unequal democracy has persisted despite attempts to adhere to neoliberal model strategies (Vinen, 2009). Progressive taxes in the U.S have had a minimal effect in lifting the standards of the less fortunate. These are the negative points against the neoliberal model. 

The government plays an important role in promoting growth and security and therefore it should try to promote a healthy and peaceful environment, protect society against exploitation and try to conserve environment. In order to this, the neoliberal model was implemented by the British government, and while it has many benefits, it can also lead to problems that call for continuous monitoring by government.  

   

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