Question

Discuss arguments for and against government intervention to protect the living standard of middle income and poor people in retirement through aggressive progressive taxation, redistribution and subsidies. If you favor the against position suggest alternatives to address the problem or justify doing nothing from an economic and ethical point of view.

Answer 1

Government intervention is great when lower and middle income groups face variety of issues and need higher income subsidies and employment support via redistributed incomes and progressive taxation policies thus helping economic output to grow substantially.

However downsides of government intervention are excessive burden on higher income groups and inflationary regime which can eventually lead to lower aggregate demand.

All in all government must intervene from personal point of view for lifting the economic output and at same time offer higher benefits to upper income groups to balance the loss and optimise redistribution of income.