How Does the Government Intervene in Business?

The government intervenes in business by breaking up monopolies, placing controls on banking activities and stock sales, creating and enforcing regulations, and establishing policies concerning the labor force, explains These interventions have developed over time in reaction to historical events and trends.

More than 100 regulatory agencies exist in the U.S. federal government to ensure health and safety and protect consumers, according to These agencies are structured to operate independently so they won't be subject to undue political influences. There are many laws and regulations concerning the ways in which businesses interact with their employees, addressing issues such as hiring and firing, workplace health and safety, child labor, discrimination, and labor unions.

In 1890, the government passed the Sherman Antitrust Act to break up monopolies and encourage competition and free enterprise, notes In 1913, the government created a banking system called The Federal Reserve to regulate the nation's money supply and place controls on banking activities.

There is much disagreement about the role of government in the economy and whether intervention should be permissible, states The Law Dictionary. Some economists argue that government programs should be replaced by more efficient private companies. Others believe the government should exert more influence on the private sector in areas such as government-run health insurance.