One of the policies that is effective to the economy and society is education and training policy. The government provides education and training facilities that teach people necessary knowledge and skills to adjust to ever-changing economy. The learners are not limited to young people who are getting ready to enter the labor force. The people who lost jobs or retired can also take part in the courses. The major benefit of this policy is that it allows the workers who cannot get jobs due to lack of required skills to find jobs with more ease. It is also advantageous since the government will hire more teachers and trainers, willing and able to educate the workers, giving those educators jobs. The quality of labor will increase as well, as more educated and skillful workers will be provided. All these merits will lead to a more dynamic economy. On the other hand, education and training does have some limitations. Since the government is paying all the money, there exists opportunity cost. If it were not for such policy, the government would be able to spend the money on doing other things, for instance, to build public facilities. In addition, this action is only helpful in long term, because it takes time for the learners to get knowledge and being trained enough to begin working under real situation. Thus, it is difficult for the government to predict how much its opportunity cost will be.
Research and Development is another advantageous policy, which is beneficial to economy and society. It allows firms to develop new production techniques and to look for ways to improve the methods of production. Such enhancements are likely to increase the economy’s potential output. However, it requires much spending for the government, when government offers tax incentives. It costs opportunity cost too when government finances research and development itself. The biggest problem is that, nobody knows whether the research will be successful. There are some possibilities that, despite the effort of researchers, the results of long time studying may not be so encouraging.
Reduction and Elimination of minimum wage is an obviously detrimental policy. The minimum wages may be eliminated or reduced when it is thought that government-set minimum wage is so high that the cost of production is above free market level. The supporters of such policy insist, decrease in the minimum wage can possibly result in a fall in the cost of production and a rise in aggregate supply. However, the major problem is that it will reduce the living standards for those who were working for and were living by minimum wages. Even though the policy may precipitate overall economic growth, it will engender inequality between the Rich and the Poor as well. To make it worse, if the amount of minimum wage either decreases or becomes eliminated, the employers can abuse such abatement as a way to mistreat the workers, for instance, by not paying them properly.
On top of that, deregulation is another example of harmful policy for economy and society. To deregulate means to abate the regulations, in which the government set. This action does have merits. The more freedom to produce with less strict limitation leads the cost of production for the firms to decrease and the aggregate supply to increase. This may result in hiring more workers. However, one very huge demerit of this policy is that without proper regulations, the firms will produce indiscriminately. In other words, they are likely not to consider any environmental issues since their main goal is to make profit. They will think most of their profits thus ignoring what harmful effects they are giving to the environment. Safety will not be concerned as seriously as well. Therefore, despite possible benefits that deregulation may bring to economy, there are environmental and safety problems that may result from such policy which can be very detrimental to our society.
Inflation is an increase in the price level of goods and services in economy over a period of time.
