Position paper economics


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Position paper economics

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Rodney Position Paper It could be argued that economics may be summarized as the study of how societies and individuals meet their needs and wants. This source contains the author’s opinion about the role government intervention should play in economic recovery. According to the source, recession cannot be helped by government intervention; only by the actions of the producers and consumers can the economy be healed. Liberalism, as an economic idea offers many different options for society in dealing with times of economic distress. The right, more capitalist side of the spectrum supported by Adam Smith would likely argue that the government needs to leave any healing to the “producers and consumers.” An opposite perspective would be those who have adopted a more left wing or socialist approach to modern liberalism. They may say that the government needs to play a larger role when the economy is in trouble, as without intervention, things like recessions may worsen. When faced with a question concerning what degree the perspective developed in the source should be embraced, one could argue that this perspective should be supported to only a certain extent. It may be argued that both the government and the body of the people need to play a role in healing the economy. There are some individuals may disagree with this statement. These people may use the fact that countries that use Keynesian economics may run into problems with debt. They may say that Keynesian economics is ineffective because politicians would not want to raise the taxes back up in good times as they would lose popularity and endanger their chances of being re-elected. They may use the governments of the United Kingdom and the United States in the 1950’s and 1960’s as an example of governments who ran into these types of problems. Other individuals, who may oppose the source completely, may argue in favour of Keynesian Economics. They may use Franklin D. Roosevelt’s “New Deal”, as an example in favour of having government intervention in “bad times”. In the “New Deal”, Roosevelt put Keynes Economic Theory into practice, putting more social programs down, and creating many jobs in public works, like the building of the Hoover Dam. In this he worked to stabilize the banking system and add a social security system. These individuals may argue that it is the
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Rodney governments duty to play the role of a physician and treat the suffering economy. They would likely say that Keynes theories are very workable if they are used properly. Despite this, It may be argued that government and the people need to both play some sort of a role in bringing the country out of economic “bad times”. Disputably, a combination of the two extremes is the best way to approach setting up an economy, and helping it to recover during bad times. During times of recession in a more right sided, capitalist country, it is arguable that the “invisible hand” disappears because people do not feel secure enough to spend their money, destroying the producer- consumer relationship. During times like these, the government should step forward in an attempt to stabilize the economy. It may be said that during “boom” times the government should cut back on public works and social programs so they have enough money to give the economy a boost in “down times”. They should also not do much deficit spending, so that the country does not run into debt problems. Milton Friedman and Friedrich Hayek both contributed to the system of Monetarism. This is a theory that says that control of the money supply of a country is the best way to encourage growth in the economic field while limiting unemployment and inflation. Money supply would ideally be controlled through regulation of interest rates; inflation would soar if too much money was produced by the central banks. Friedman thought that if money supply was increased, consumer spending and demand also would raise, as well as inflation. Ronald Reagan was a supporter of Friedman and Hayek, and decided he would like less government control in society. He thought that reducing income, business taxes, and regulation, and increasing military spending would leave money in the pockets of the ones most likely to invest it economically. This would encourage economic growth and benefit the working class in the end. One could say that this theory was unsuccessful as the numbers show that the wealthy ten percent were earning nearly half of the country’s total income. Debatably, a mixture between Keynesian economics and Monetarism would be the best way to handle economics. This model was first demonstrated by Tony Blair who was the British Prime Minister from 1997-2007. He took a stance between the familiar conservative approach and a more socialist approach, combining the good things about Monetarism and Keynesian economics. This structure would combine some social
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Rodney programs with free market policies. Blair increased spending on things like health care and education, and introduced national minimum wage. He also introduced a tuition fee for post-secondary education. Blair was a very successful politician, having one of the longest terms in office of any of the Prime Minister. The Netherlands have also used a similar model to Blair’s and it has been mostly successful in stabilizing the economy. If the best features of Keynesian economics and Monetarism were taken and a system was formed, it may be the best way to handle the economy in good times and bad. When faced with a question concerning what degree the perspective developed in the source should be embraced, one could argue that this perspective should be supported to only a certain extent. There are some individuals who may disagree with this, people who are on either side of the political spectrum. The right side would argue on the side of the source because they would believe any economic healing has to be done by the “economic body”. The left would argue that without government intervention, any “economic wounds” may worsen. It may be argued that both the government and the “producers and consumers themselves,” need to play a role in the recovery of the economy. A mixture between Keynesian Economics and Monetarism would perhaps be the best way to handle the economy.