Political Pressure

For the AS shock argument to hold true, we would need to see a period of both high unemployment and inflation directly following the shock. However, on first inspection, the data suggests that over the period, rates of inflation and unemployment are moving in exactly opposite direction. The working hours reform occurred, as pointed out by Bowie, at the beginning of 1919. Dowie comments that roughly 91. 4% of the overall reduction in hours made over the two year period of January 1919 to December 1920, had taken place by July 1919.

It Is Political Pressure From Producer Groups, Rather Than Consideration Of Market Failure, That Explains Governmental Reliance On Regulation. Discuss... Regulation is a state-imposed limitation on the discretion that may be exercised by individuals or organisations, which is supported by the threat of sanctions. i It is common knowledge that politicians have an incentive to get re-elected and to maintain power and control. So, while the Government likes taxation and depending on ideology, nationalisation. It must consider the backlash of its decision, concerning the welfare of all parties concerned.