We live in a time where a lot of focus is being put on the government, whether or not it is doing its job and whether or not the government has too much power. One of the most frequent debates involves questioning the government’s legitimacy in the first place. This is because of the fact that one of the most widespread ideas that is gaining popularity these days is that of an absolute free market. In a concept that is almost completely Randian, the libertarian movement frequently claims that the free market should be allowed to regulate itself, and that if the government intervenes it would be inherently unfair.
However, there are a lot of situations where the free market having certain restrictions is actually beneficial for society. Of course, things like trade and the like are necessary and should remain as free as possible, but then again is heroin was allowed to move around as freely as things like salt then there would be a serious drug addiction epidemic. This is something that can be argued, however, because drugs were illegalized quite early on and we never really got to see what the market would become if the ban were to be lifted.
One example of how government intervention in the free market can actually work and benefit society without harming the profit making potential of enterprising capitalists is Low Income Housing Tax Credit. This is a tax credit that is provided to developers in order to entice them to build real estate in low income areas that would be affordable for people to rent out and buy. Real estate can often be very expensive, and the free market would make pretty much all housing expensive one way or another. Hence, real estate developers have no incentive to keep rent low, but government subsidies can make this happen quite easily.
Basically, developers receive these credits and can exchange them for goods and services that would make their construction projects a lot easier to complete at a more affordable rate. The tax credits are not a life long deal, though. There are situations where investors can end up losing their credits, such as if they don’t maintain their properties. This ensures that these properties are maintained reasonably well, something that would not have happened at all if investors were allowed to do as they please and still receive their all important credits.
These Low Income Housing Tax Credits have been an enormous success, resulting in the completion of millions of homes in these areas. It is safe to say that without government intervention, the poor would have a much more difficult time finding affordable housing that they would be able to live in for the long term. Hence, the government should be allowed to intervene in this manner from time to time, for no other reason than that it would make society a little more fair for its lowest rung which often gets left behind.