ASSIGNMENT 3 BAHASA INGGRIS NIAGA.

71

Name: Tri Dharma Nur Patria

NIM: 041149165
UPBJJ: Bogor

Topic:
The principles of Laissez-Faire are not valid anymore in this present time.
Do you agree or disagree to the statement?
Yes, I agree to the statement.

Laissez-Faire And Government’s Supervision In Economic Activities

Since humankind carried out economic activities, many economic concepts

were born with various benefits and weaknesses of each. From various
economic principles and theories that exist, there is a principle that is quite
interesting and very influential in the era of Classical economics. The economic
principle is "Laissez-Faire".

"Laissez-Faire" is a French term that literally means let you do or let it flow or
let it be. "Laissez-Faire" is a classical economic theory which underlies the
understanding of capitalism and free market. "Laissez-Faire" in the economic
itself translates freely as minimization of government participation in economic
activity including the implementation of regulations, economic supervision and
the application of taxes. There is also the opinion that "Laissez-Faire" can be
translated as less is more, which means less government role in the economic
activities will be better for the market mechanism. All definition of "Laissez-
Faire" refer to one thing, the reduction of government's role in economic
activities. “Laissez-Faire” has its golden moment during the late 18th and early
19th century with the peak of it known as the Industrial Revolution. However,
“Laissez-Faire” is no longer relevant today. The main weakness of "Laissez-
Faire" is the market mechanism not always effective and efficient. In addition,
here are some of the weaknesses of "Laissez-Faire":
 Information needs of consumers cannot always be captured by the supplier,
and vice versa. This raises excess or lack of inventory in the market.
 The occurrence of monopoly practice or other unfair business competitions
which will greatly disrupt the market balance and detrimental to consumers.
 There are adverse impacts on industries such as environmental issue as well
as other social issues.
 There are people's needs that cannot be provided by the market, such as
public facilities.
The accumulation of market failures caused by these weaknesses was the
Great Depression in 1930.

To improve the economic failure caused by "Laissez-Faire" government

intervention was implemented in economic activites. Based on common
practice, in general, government intervention can be classified into two groups:
1) As a regulator and supervisor, and
2) As a provider and manager.
One of the government's interventions as regulator and supervisor is by
government’s supervision in economic activities. The government’s supervision
in economic activities should be significant to protect the consumers and the
economic activities. In Indonesia, government supervision in economic
activities is stated in the Act of the Republic of Indonesia - Number 5 year
1999 concerning the prohibition of monopoly practice and unfair business
competition. To supervise the implementation of the Act, an independent
agency KPPU (Komisi Pengawas Persaingan Usaha/Business Competition
Supervisory Commission) was formed and is answer directly to the president.
Examples of the implementation of KPPU's tasks can be seen in a number of
cases charged by KPPU and had such big impacts on the community, they are
the short message rate (SMS) which was initially IDR 350 each time send can
be reduced after going through a long process in court and a case of collusion
between two motorcycle manufacturers (Honda and Yamaha) which raise
vehicle prices at certain prices.

Economic activities will always develop over time and there will always be
improvements from various economic theories as well as what happened to
"Laissez-Faire". Therefore, the government as one of the main actors in
economic activities must always be aware of the current situation and always
be adaptive in making various policies in line with the economic development.

*Refererence:
 Tuton ADBI4201 Bahasa Inggris Niaga, Material Session 6 Reading
Material: "Laissez-Faire"
 Tuton ADBI4201 Bahasa Inggris Niaga, Material Session 6 Video Material:
"Laissez-Faire"
 https://www.kppu.go.id
 https://www.djkn.kemenkeu.go.id/artikel/baca/12670/Intervensi-
Pemerintah-Dalam-Perekonomian- Bagian-I-Ringkasan-Sejarah.html
 https://www.antaranews.com/berita/1207620/kppu-undang-undang-
persaingan-usaha-belum-banyak-yang-tahu