Suggest how government in United States has sought to correct market failures.

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Ashley Kannan eNotes educator| Certified Educator

I think that the assessment of the recent economic crisis in 2008 might help here.  In the end, I think that many would conclude that some level of government regulation or overseeing was absent and sorely needed.  The "shoddy" mortgage lending practices as well as individuals taking advantage of a setting where there was little in way of government regulation were remnants of how the "invisible hand" might truly be absent.  The proponents of a free market system can only support it when all individuals play by its rules and not corrupt it for their own greed and selfish motives.  In the end, individuals who twist this system from their own benefit end up subverting the market as it hits a period of contraction.  The continual call for deregulation and a lack of governmental oversight at points when individuals were manipulating the system for their own benefit and when damaging practices hurt the market, in general, were part of this calculus.  I think that government has understood that its role in any economic situation does not have to be one of forceful control, but simply ensure that the playing field is level and that the system,itself, is fair and equitable for all to participate and for its own sense of sustenance.