Saturday, March 6, 2010
Behind the Scenes of the Hayek/Keynes Rap Video
So now that we have all watched the infamous Keynes/Hayek rap video, its time to go behind the scenes and the video explained to us. Please watch the video (about 10 minutes) and answer the following questions:
1) What happens when the government increases its spending to help people hurt by the recession?
2) Whose side would you take in the rap battle? Explain your answer?
3) Do you believe that it is the role of the federal government to spend taxpayer money to create jobs? Why or why not?
Due Sunday 3/14 @ 8pm.
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1. When government starts spending money, theoretically it is supposed to boost the economy because there is going to be more money flowing in the system and flowing to the businesses, so they can hire more workers and get more people spending, stimulating the economy. This means that people who are unemployed at the moment might be able to find a job and provide for their families again. With more government spending, it means lots of interference, and therefore it is not as much a free market or capitalist economy anymore. This also means that the concept of self correction is thrown out the window. It causes our deficit to soar as well as increase our national debt even further than the hole we have dug ourselves into if there is no return. However, I feel that if we are smart and work towards getting people employed again rather than giving the people benefits without giving them some reason to go back to work will stimulate the economy in the long run.
ReplyDelete2. I feel like I would take Keynes’s side on this economic battle only because it is hard to say when we are going to be able to see change if we don’t take action. There are lots of families who are suffering right now because of unemployment and sticky wages, and I feel that it is partially the government’s responsibility to look out for the well being of the people in its nation. Also, the markets are not going to start correcting themselves if the government does not start giving them money to spend on hiring more workers. There needs to be some sort of motivation to get more people involved and give the people confidence in the economy we have right now. There has to be a sense of back-up for the businesses to want to try to get people working and spending again, which the government can provide with increased spending.
3. Quite honestly, we choose our representatives based on vote and they are the ones who plan the budget and carry it out, so if you are strongly opposed to allowing your money to be spent on such stimulus packages, either gather more support for a candidate who is going to get the people in Congress to put their hands down and say no, or step aside and trust the government when it comes to spending on what they feel is necessary. Personally, I feel that if the government does not provide some sort of push to get the businesses to have confidence again and hire more workers and spend more, then the economy is going to be in a slump for a very long time. We need to get more money flowing, and to do that, we have to make the citizens see that we are making an effort to help out those who are suffering and get the businesses to feel safe spending more money.
1. When the government increases spending it is attempting to stimulate the economy by creating more jobs. This allows more people to have money to spend which will create even more jobs. Even though the concept of create more jobs is very appealing it also increases our deficit. In the long run stimulating our economy simply adds to our debt.
ReplyDelete2. If I had to pick between Keynes and Hayek, in general I would side with Hayek. Most of the time I think that the government should stay out of the economy as much as possible. However, there is a time when the government should intervene. Unemployment is very high and due to sticky prices the economy can not adjust to this, when this occurs the government has no choice but to provide a stimulus of some kind.
3. I feel that if the economy can not naturally stimulate itself to create more jobs then the government has to take control. The economy could bounce back on its own but it will take a lot of time. To speed along the economy’s return to normal the government can spend money to create more jobs. People are suffering and the only way to quickly fix this is for the government to create jobs, this will help people gain more trust in the economy and spend more. As long as the government does not over-stimulate and waste taxpayer’s money it is good for them to use it.
1) The video says that trying to stimulate the economy will actually make it worse. From my understanding this is both try and false. The video brings up that the stimulus package will diminish the countries confidence. My understanding of this is that the people will them moreover believe that we are in a recession and continue to hog all of the money, rather than spending it. In my opinion, it all depends on a couple factors; what is the economy doing before the expenditures, on a world bases, what events are happening, and how technically advanced is the world. I believe that there are probably more factors that I cannt see, but are still there. I believe we are trying to oversimplify a very very complex idea.
ReplyDelete2) I would take both sides, and neither at the same time. I believe in both ideas, to an extent. Since I wasnt here for the video when the class watched it, and saw it on my own, I might have gotten the wrong idea about it. Keynes seems like a government intervention guy, while the H guy seems like a free market guy. I think at different times the economy should be self driven or government driven. I believe mostly it should be self driven. It is a naturally beast that understands itself more than any of us do. Also, I think when it is going downhill, I think the government could attempt to stimulate it to an extent. I believe that we have had way too much government intervention and that it has overall screwed up the economy so bad, that there is not one straight move that we can do to fix it. Now I could continue with about the 80 other ideas explained in the video and how I believe a little of both, but mostly the H guy's ideas, but rather I will end here.
3) I do not think that taxes should be collected. I believe that people will be able to pay their dues to other people, and should not have to to the givernment. But, crossing over myself, I believe there should be a barrier of money, such as if you have so much money you do have to pay taxes, a high amount of taxes. I believe this would be a much better system than the one that is in place now. This money could then be used for givernment purposes, not job purposes. The government's motives to spend it's money shouldnt be to create jobs, but to further it's country as a whole.
1. Ideally, the government would most likely reduce the amount of their spending and also cut the prices of taxes. However, when the government increases their spending significantly, they will have to higher their taxes. As money starts to become sparse and people start to spend less frequently. Because of this business’ will have to decrease their production to match the demand. Therefore, they will have to fire workers who they can no longer afford. As this becomes more common, more and more people will try not to buy as many things as possible, and therefore the cycle repeats itself. The economy would be better off if the government decreased their spending as well as the taxes.
ReplyDelete2. I think that I will have to take Keynes’ side for this “rap battle,” because there are many families that are experiencing economic troubles, especially during this time and I think that that has something to do with the lack of government help. I think that they government is mostly responsible for people losing their jobs and the problems within the market. The government is not lowering taxes that will overall help the economy become better in the long run. If the government does not help give the businesses money, then they will not be able to higher workers and the cycle remains how it previously was.
3. I think that the government mostly should be the ones who spend the taxpayer money to create jobs because that would overall be helpful for the economy. I believe that by taking a small percentage of the taxes to create jobs should be the ones in charge of it because they are the ones that the taxes go towards to. However, I feel that by the way the government is handling the recession; my hopes will not be high for them…
Some of the people in this interview argue that when the government intervenes to help people who are hurt by the recession that they actually end up making it worse in the end. They say that buy messing with the economies delicate balance that they screw it up in the long run because it can fix itself. I personally take Keynes side in the rap battle because I agree that the economy can fix itself in the long run, but like he said it will not recover fully to its full potential. Because the economy goes through cycles of contractions where things get bad and then good again, it is said that it can always just fix itself, but with the correct government intervention it can shorten those contractions and make the hard economic times shorter. I believe peoples confidence does play a large role in keeping the economy on track, and that’s why it can be very difficult to keep an economy in tact when a recsion has occurred or talk of a recession takes place. I like that the car companies offer incentives to buy their vehicles with the guarantee that they can make a full return if they loose their jobs well paying for it in the first few years. Its policies like this that give our country confidence in spending money, and if more companies would offer this we can start to see a higher GDP and eventually we wont even half to worry about loosing our jobs. I think that it is the federal government’s job to spend money in order to create jobs when our unemployment rate rises above the 5% level. If the government intervenes correctly we can keep the tough times as short as possible.
ReplyDeleteWhen a government increases spending to combat a recession it increases spending and almost ensures higher debt and higher taxes. This looks bad on paper but is necessary to combat a recession. However, several benefits come with it; government programs like cash for clunkers can be put in place to help consumers as well as producers. It certainly helps the people hurt by a recession. I would have to be on the Keynesian side, I do believe that the government should intervene and help the economy out. I don’t think that a government should stand around twiddling their thumbs while people are suffering. When a government is stagnant during a recession or depression bad things ensue, misery and anger by the people. As long as the government does all it can to ensure economic security I don’t think they should be held at fault. I believe that a government can use taxpayer money to create jobs if they are helpful to us as a country. If they help us out in the long run I see no problem with them spending my money this way. As long as the money is not wasted on some stupid project I am completely fine with it.
ReplyDelete1) When the government increases spending, it is supposed to create more jobs and improve the state of the economy. It seems like this can have both positive and negative effects. Although it oftentimes is successful in decreasing unemployment and stimulating the economy it can at times be unsuccessful, increasing the nation’s debt with few positive results. The problem seems to be that no one is entirely sure how to stimulate the economist. Keynes believed that much larger stimuli were need to improve the government while Hayek believed in minimal government intervention. We currently find ourselves in a predicament because the government has implemented a stimulus but not to the large degree theorized by Keynes. It seems as if the government is unable to make a decision and that is why we seem to be in a stale mate, with little change in the state of the economy in either direction.
ReplyDelete2) I am unsure which side I would take in this rap battle. Both sides seem to have their own positives and negatives. While I believe that sometimes, some government intervention is necessary, I don’t believe that the extreme intervention theorized by Keynes is completely necessary. On the flip side, I also see the positives to Hayek’s theory. The business cycle shows that the economy will naturally have its ups and downs and that eventually everything will work itself out. I do not think that everything will be ok if we just sit back; I think some stimulus is a good thing at some times but that at others, we just need to ride things out. The problem is that these two theories are very extreme and are polar opposites. I believe that a mix of the two would be optimal.
3) I think that yes, the federal government should use tax money to create new jobs. They are the ones who lead our country and it is their duty to ensure that everything possible is being done to achieve a healthy economy. However, this does not mean constant stimuli but it also doesn’t mean zero intervention. The key is a healthy balance, a mixture of both Keynes and Hayek’s theories.
1) When the government increases its spending, aggregate demand shifts left. This can be good for the economy, however when the government is in debt, like the ours is, leads to increased interests rates, and causes more people to save instead of spend. Due to the increased interest rates, consumers will spend less and will take out less loans. This decreases investment, causing the future to be in jeopardy. Even though the government is creating more jobs in the short run, they are doing so at the sacrifice of long run growth.
ReplyDelete2) In the rap, I would have to side with Hayek. The economy has its ups and downs, but the downs are necessary for the ups. If the government gets involved to attempt to prevent the bust part of the boom and bust cycle, the results will be catastrophic in the long run. The progress of the economy will stagnate because people will not invest as much as they used to due to the increased interest rates. The government will also be unable to fund companies due to the increasing debt that results from their increase in spending. If the government were not in debt, then it might work to an extent, because the government can do the investing. For the U.S. however, Hayek appears to be the way to go. The economy will fix itself, and progress will continue, but if money is fed into the system by the government, then the progress of the future is put at risk for the safety and comfort of today. People just need to buckle up and tighten their budgets in order to allow the economy to return to the boom of the cycle.
3) I feel it is not the government's job to spend taxpayer money to create jobs because this sacrifices the future. The government needs to use taxpayer's money to pay off debt as well as to invest in companies that can improve the progress of the economy. By spending the taxpayer money on creating jobs, the government becomes too concerned with the future and gives into the demands of the ignorant people that sometimes are blind to the long run effect of having jobs. By creating these jobs with the tax revenue, the government is preventing progress and causing lazy people to benefit at the expense of the future. The government is also not paying back their loans to other countries, which causes the national debt to increase due to interest, and remain unpaid, unabling the government to invest in innovative ideas because all of the taxpayer money is spent on the national debt and on creating jobs.
1) When the government increases its spending to help people hurt by the recession, it is supposed to shift the aggregate demand line to the right and thus increase real GDP, expand the economy and bring society to its full employment output. This all looks nice and pretty on the graph but unfortunately this is not absolute. The economy naturally goes through its ups and downs without government intervention and there is no proof that intervention is responsible for economic expansion. On the contrary, there is no proof that it hurts the economy. The fact is that we don't know. As of right now, Obama's huge stimulus spending is doing nothing to help our unemployment problem. Our economy is looking somewhat upward but again, no one can prove that is because of the stimulus. Even before the stimulus came into play, the economy was looking up
ReplyDelete2) For this rap battle, I'm taking the side of Hayek. The economy has the tendency to contract and expand in cycles and when the economy is in a recession, unemployment tends to get bad and people start losing confidence. To say that government spending is the answer to this situation is not necessarily correct because it is not proven to actually help with the problem and if the country is in severe debt (which we are), the debt will only get worse with every stimulus dollar spent and thus, the people will lose even more confidence and be to scared to increase consumption. This is where government spending does not necesilary increase aggregate demand and help correct the problem. It might and most likely will increase AD if the economy has just recently entered recession but this is anything but the case today. There have been bad recessions in the past that bounced back fine on its own with no or minimal government intervention and stimulus so why should things be any different today?
3) For this question I have some mixed feelings. I think the government should intervene on a minimal level and create jobs with taxpayer money as long as those people employed by the created jobs stay in work in the long run. I think road, bridge, community projects are great and create jobs for people that were formerly unemployed in the SHORT RUN. These jobs are not going to last no more than a year and this is where people don't stay in work in the long run. This does nothing to really help the unemployment problem because when workers are done building a bridge, they are again out of work. We do need these jobs but the government should focus more on using tax income to create long lasting jobs that will last in the long run.
Tim Adornetto
ReplyDeleteMr. Janczak, Prd. 5
AP Economics
3/14/10
Hayek/Keynesian Rap Analysis
1. When the government increases spending in the economy, there is also an increase in money flow. The higher the money flow, the higher the GDP. Jobs are created and the value of the dollar goes up. Unfortunately, there are also many negative effects of a stimulus package. People are more encouraged to buy foreign goods and the money goes right back out of the market again because the value of the dollar goes up. The national debt snowballs higher when a stimulus package is put in place because of the money we are forced to borrow from other countries. The natural market has a self-correction system where mistakes are paid for. If the government is there to bail out companies’ mistakes, then these mistakes will continue to take place rather than being exterminated from the economy.
2. I am on the side of Hayek in some ways and Keynesian in others. I think we should allow the economy to work itself out as long as the recession is not causing too much suffering. In my opinion, stimulus packages can boost the economy out of a recession quicker but they create too many long run negative externalities to be effective. The natural self-correction of the economy is the fairest system of economic policy that can possibly be enforced. However, I also think it is unacceptable to allow the suffering of the Great Depression to occur in our economy in the short run. However, I do not think America should take out loans from other countries. We need to learn to be self-sufficient.
3. I think stimulus packages should be used as a last resort, only when the economy gets really bad. If it gets to this point, I think that the Federal government should create jobs for people using our taxpayer money but I do not think that we should borrow money from other countries to do so. I also think that instead of bailing out failing companies, the government should create new companies. I still feel that people should be disciplined for their mistakes so that these mistakes can be uprooted from the economy.
I absolutely agree with Keynes, government intervention is extremely necessary for our economy to recover, also Skidelsky's point makes sense to me. We are not like the people of the great depression. If there is not help many would suffer. Skidelsky is right when he says people are suffering who had nothing to do with the huge mistakes which were made to cause this depression, and that there is a need to balance the spending wastes. Unfortunatley, there are so many people and factors involved and government changes that before something can actually work we have new govt. policies and start something different. It is posible for anything to work if given enough time, but I truly don't see any plan fixing anything permanently, because everybody has their own agenda and no plan gets the follow through it needs to accomplish its goal.
ReplyDeleteBoth points of view have valid arguments, however the more convincing view for me is Keynes, if the government intervened sooner we wouldn't have so many people suffering right now. As for tax money being spent to create jobs, that is what we should have done with our tax dollars a long time ago. Government intervetion not just with money but regulating shady business practices could have slowed the rapid decline in our economy. Our tax dollars are best spent on us creating jobs and boosting the economy. I do not think a tax increase across the board is necessary, I think the tax breaks offered to the extremely wealthy should be postponed until things get better then modified to create a fair distribution of wealth. It is insane that someone making close to minimum wage pays more taxes than millionaires, which has actually been happening for years.
Sometimes I think no matter what anyone does there is always going to be a deficits and problems, we are a wasteful society and no matter what we try there are going to be those who cheat, steal and lie causing problems to continue on for everyone.
1) When the government increases its spending (and consequently raises taxes), demand shifts right, increasing quantity and prices. The spending is supposed to increase the money supply going towards businesses. This helps those hurt by a recession because demand goes back towards equilibrium and full employment. An increase in quantity will result in businesses hiring because quantity supplied goes up.
ReplyDelete2) I would take Keynes side because to stop unemployment from rising the government has to come in with stimulus to replace declining private spending with public spending. In today’s modern economy, wages and prices are sticky because people will not take wage cuts and people won’t spend even if the prices plummet. The government has to protect the economy from itself. Keynes believed that the economy would bounce back without government intervention, but the economy would not bounce back to full employment.
3) I don’t think it is the role of the government to create jobs but I think that they should use taxpayer dollars to create jobs. They shouldn’t use taxpayers’ money to create jobs by building a road in Alaska to nowhere, but to give stimulus to local and big businesses to encourage them to lower prices hire and more workers in order to get the public spending again. Although a stimulus to businesses would hurt taxpayers, in the long run the government has to think of what will get spending and income back on track. I do believe that it is the government’s responsibility to look out for the people and that includes helping businesses get back on track throughout the boom and bust cycle.
1. When the government increases spending to help people hurt by the recession it causes there to be more money flow in the economy. With more money jobs are able to employ more workers and therefore more unemployed workers can find jobs. But when government increases the spending it causes the nations deficit to increase too. When the deficit increases so does the debt and then we are still stuck in a recession.
ReplyDelete2. I’m in the middle because I think that the government usually ends up hurting the economy when they step in but at the same time something needs to change because without help the markets are never going to fix themselves. Hayek’s idea that the government should never intervene with the economy is extreme. If the economy is suffering and doesn’t seem to be going anywhere then the government should step in and help out. There should be some happy medium because without the governments help the economy will not be restored to its full potential but with its help there usually comes more damage.
3. I feel that at this point the government should be using taxpayers’ money to fix the economy and create a stimulus. Even though it might cause more problems in the long-run, the economy needs a jumpstart. By using taxpayers’ money to create jobs, it allows for there to be more people employed and helps out those who are suffering. So yes, the economy needs a kick in the butt to get going again and the only way to help it is to spend taxpayers’ money and create a stimulus.
1) The government only starts to increase its spending when the economy needs to get back moving. They increase aggregate demand and have total spending on everything. It helps stimulate the economy and help people out of work during “contractions, slumps, recessions, and depressions”. Some of that is because of government mistakes. Russ Roberts believes that the economy can bounce back fairly quickly when there isn’t government intervention from an increase in spending. On the contrary, the old guy (who I forgot his name) seated beside him says that that would ruin communities and we can’t risk doing what Roberts suggests.
ReplyDelete2) In this epic rap battle, I would have to side with Mr. Keynes because his ideas are more minding of the families that were effected (or is it “affected”?) because of the governments’ decisions. The unemployment and wages were a result of the irresponsibility of the government. They should be looking out for the people in the economy instead of just the money being flowed throughout it. Their well being should be the priority of the government.
3) I think that it is the role of the federal government to spend taxpayer money to create jobs because it is their job to make sure they are leading the economy into the right direction, doing what is best for the people living in it. They need to make sure they are doing everything possible for a growing, healthy economy. This increase in taxpayers’ money would help get people employment, and get rid of some of the problems people who were effected (affected?) by the recession had to face.
To start, I just want to say that I found the video to be very interesting in the way that they had the two men with almost the same views as Keynes and Hayek. But anyways, to answer question number one, there are obviously many different opinions on what will occur when government increases spending. According to Keynes, an increase in government spending will cause unemployment to stop from increasing when the economy is getting rough. Also, not only will spending stop unemployment from increasing, it will also create more jobs, in turn decreasing unemployment. Now this sounds like an excellent idea; however, Hayek as the oppisite opinion. Hayek's theory is that when government spending increases, absolutely nothing changes other than the fact that the economy is in an even deeper whole. Hayek believes the government often spends wastefully and does not put money where it actually needs to be used. So what is Hayek's plan to fix wasteful spending? Simply this. The government needs to keep it's hands off. The government needs to just sit back and let the economy correct itself overtime.
ReplyDeleteAfter watching the rap video, I would have to side with Hayek on this one. Hayek believes that the government often spends wastefully, creating an even deeper economic hole. Hayek says that in order to fix this hole, the government should just back off and let the economy correct itself. I completely agree with all three of those statements. I personally don't see any change resulting from the government stimulus package that was just recently put into place. Therefore, goverment spending obviously doesn't work, and it's jsut going to cost the taxpayers more in the future.
As implied above, I do not agree with government spending of taxpayer's money at all! It does not matter what the money is going towards, it seems as if the extra spending hasn't helped anyhting. ANd what does the government decide to do? SPEND MORE! What is that going to solve? AS Hayek says, a bigger hole, that's what. And then once the economy is back on track, the government is only going to increase taxes to get that money back. Therefore, the taxpayer's are only paying double. Government spending is useless, let people figure it out on there own. If people truely try to fix this, it will get fixed, the government just needs to sit back and let people fix this independantly.
1. When the government increases it’s spending, it boosts aggregate demand thus raising the GDP. Now there is more money circulating in the system and companies have money to hire workers. Thus, unemployment decreases. Also because of the multiplier effect, investment will actually have a larger affect on the economy than one would think. This investment will give the economy a boost when it is experiencing cyclical unemployment and recessions. Of course, this is only one side of the argument, or Keynes view of things. Unfortunately, this government spending has negative side affects also. The deficits brought about by this huge spending that the government is doing may also hurt the economy in the long run. These deficits will keep digging a deeper hole in the national debt, which will burden our future generations. Also the government is now somewhat controlling the private sector of the economy and so, our economy cannot function freely. The natural process in which the economy would recover itself is disrupted by investment and thus the economy will never permanently recover.
ReplyDelete2. I would actually argue that Hayek ands Keynes views must be applied to strengthen our economy, according to the circumstances the country is in. Right now in our economy, banks are fearful to lend because of the economy’s recession and people are finding it harder to borrow money. Keynes would say government investment is needed to build confidence in banks. But when the government did that, as Hayek predicted, the banks saved this money and did not lend it out. So right now, government investment should maybe go towards creating new jobs instead of going towards the banks. As this example shows, the government should stimulate parts of the economy that desperately need help, and leave other parts of the economy alone. This is so government investment does not hurt these sectors instead of helping them.
3. It is the role of the government to stimulate our economy when it needs help. Our country should not have to suffer years of cyclical unemployment in order for the economy to fully recover again. But, the government must realize that the money we are giving them is not their money and that they can use this money wastefully. They should logically think out the pros and cons about the programs they want to invest in and make sure that the pros outweigh the cons before putting billions of dollars into a program. The government should spend money but it should be smart about spending it.
1)The point of increasing government spending is to create more jobs and in doing so, better the state of the economy. The only problem is that government spending increases are federal debt. Normally, a government would be able to handle the spending deficit that comes with increasing government spending but right now we already have massive amounts of debt. Another problem is that the congress is so stagnant because of the battle between the democrats and the republicans. At this rate the economy will recover by itself before anything gets passed. Also, a lot of the elected officials in the government have said that they will decrease our debt but right now that is almost impossible.
ReplyDelete2)I would agree with Keynes if we didn’t have so much debt but, with the government already taking a deficit I don’t think we have any other choice but to let the economy correct itself. Also, as I stated before the stalemate in the congress won’t help anything get passed anyway. We can point fingers and play the blame game but if we want to get through this we have to work together and persevere till the economy finally does get back to where it once was. The good thing is that the economy is already on a slow but steady increase.
3)The role of the government is to ensure stability in the union and right now, that stability is fading fast. People still need to realize that doing the right thing is not always the easiest thing and the people and the people they elect need to realize that the right thing is to increase taxes in order to stabilize the economy and get rid of our national debt. The problem is that people demand that the government fix are economic problems but then when the government asks the same people for a little money, they get all upset. Sadly, not even a major economic recession shocked people enough to wake up and realize that there is something wrong going on. I really hope someday people will realize that our national debt needs to be fixes but in the meantime I’ll be studying up on my Chinese.
1) When the government increases their spending, it is to help the state of the economy and create more jobs for people. They increase their spending for the benefit of those who are hurt by recession and the economy, but it can increase their debt, which makes the economy worse in the long run. Also when the government increase spending it is supposed to help everyone, but people can be unpredictable and use it differently, which does not help the economy.
ReplyDelete2) If I had to take a side I would choose Keynes’ side because the government gets involved to help the state of the economy and decrease unemployment. I do think that sometimes government involvement isn’t for the good of the economy, but at some points it can’t function without it. So I believe that overall for most of the time it will benefit from the government. I don’t agree with Hayek that the government should never interfere because if that was the case, we would be way worse off than we are right now. It is better to have the help of the government. They just have to make sure they are giving the right amount at the right time.
3) Yes, I believe that the government should use taxpayer money to create jobs as long as it is to the benefit of the country. They should create jobs that can be used for a long period of time and provide goods and services that everyone needs while not putting other businesses out of work. Overall it can help stimulate the economy a little while the rest is correcting itself.
1. When we talk about what would happen when the government starts spending more money well the answers is kind of simple. Since the government is spending more money, more people have money in their hands which causes for unemployment to decrease. Because the more people are spending the more jobs there are for the unemployed. Although this may seem like a solution to all the problems the thing is that in the long run this process adds up to our dept.
ReplyDelete2. When it comes to who I agree with based on the rap and who I think wins the battle in my opinion, I feel that Hayek’s point of view is better than Keynesian’s. For the simple reason that I feel that the government should stay out of the economy for most of it but intervene when it is supposed to. Which raises a big question that maybe hard to answer. When us that point that the government should intervene?
3.In my opinion I feel that the government should not collect taxes. I feel that specially for the creation on new jobs taxes should not be collected. But there is a good reason that would help in collecting taxes if they were collecting them to improve this country as a whole. I really don’t know a lot about taxes but I feel that people like those celebrities and rich should be the one to give more taxes than us. And use that money to benefit the country. Because they are the one s that wine about how much poverty there is.
When the govenment increases spending in a recession they are trying to stimulate the economy. In other words trying to help it. Their spending helps money flow in the economy. It also helps to start jobs so people who are unemployed can get jobs and start making money. There is also a negative effect to this. When the government spends money it adds to our deficit. Then later it will increase our debt, which puts us in a recession.
ReplyDeleteI would have to take Keynes side with this rap because there are a lot of people out there with no jobs and struggling and the government is not doing a whole lot to help. I think the governent is to take the blame for people losing their jobs because they are spending money on useles things that is just making the economy worse by the end of the day.
I think the government can spend taxpayer money as long as it is helping creating jobs and helping the economy. If they soend it on stupid stuff then they really should not spend it.
1) When a government spends more to stimulate its economy it is creating a rightward shift in the aggregate demand curve. This increases output and price level. Because output is increased more people will be needed to produce more products. This boost in employment is supposed to then get people more money so that they can continue to spend more which cyclically creates more jobs and so on. It is much like a stimulus package except that the government knows where the money is going. A problem with this way of attacking the recession is the deficits that it causes. The deficits make recovery harder on the country down the road.
ReplyDelete2) I would side with Hayek probably before we started having government intervention. Unfortunately now that we have begun to spend more the economy can no longer recover on its own to its full potential. Once the government begins to increase spending it has to continue to spend until the economy is okay or the economy might begin to decline a bit once spending stops. I believe that at first Hayek has the better solution, but once we begin to use Keynes solutions there is no stopping until recovery is complete.
3) I believe that there are only specific times when the government should use tax money to stimulate an economy. It is times like the 1930 depression when they should use the tax money. When times get really bad and clearly need a boost. I believe that unless there is no end in sight to the recession the government has no business spending money that could be better used elsewhere when the economy will self correct anyway.
1. The government tries to create more money flow to help those who took the blow from the economy by creating more spending. More money mans that more people can be employed and more jobs will be created for those who were once unemployed. However, when government increases the spending, the nation’s deficit is also increased, and when the deficit is increased, so is the debt and then we slide deeper into recession.
ReplyDelete2. I can’t choose either way. I believe the government generally hurts the economy when they intervene, however, at the same time something needs to change because without help the markets are not just going to fix themselves. Hayek’s idea that the government should never step in to fix the economy is a bit over the top. Sometimes the economy needs help to get out of troubled times. If the economy isn’t making any progress in getting out of its suffering, then government should intervene and help pull the economy out of trouble. Both ways of thinking should be taken into account, because without the help of the government, the economy will not be fully rebuilt to its full potential, but too much government intervention could cause more problems than it fixes.
3. I think that this far into recession the government is right to be using taxpayers’ money to fix the economy and create a stimulus. Although there may be more issues for the economy in the longrun, the economy needs a push to get it going. The use of taxpayers’ money to create more jobs will allow more employment and less unemployed, suffering people. So yes, I agree that the economy needed a little jumpstart in order to get us rolling again and the way to do that is to spend the taxpayers’ money and create a stimulous.
1) As the government increases spending, it is thought to change declining private spending into public spending; it also helps those who are jobless by increasing the money flow and allowing more money to go towards businesses. Thus stimulating the economy and theoretically helping people who were hurt by the recession. But while this all may seem good, it also takes away the freeness of our economy and makes it so that we are no longer able to correct ourselves naturally.
ReplyDelete2)For the rap battle, I would have to say I'm in the middle because I agree and disagree with both. In my opinion, both ideas are very extreme, kind of like polar opposites. I agree with Keynes in the sense that sometimes, when things get too rough, the government has to intervene because there is only so much suffering an economy and people can take. But sometimes the economy should learn to heal itself because we can't start to become too dependent on the governments help. On the other hand, I agree with Hayek's idea because the economy will never be strong enough to heal itself if the governments always doing the dirty work. But I don't agree with Hayek because what if the economy is in absolute need of help from the government, then what. Also, what if whatever the government does just ends up hurting the economy and people instead of helping it...there's no turning back then. Maybe the economy could have fixed itself. I believe it depends on the situation. Sometimes we will just need to find a happy medium instead of being so extreme.
3)I feel that in times like this, when the government has already intervened, then yes they should spend taxpayer money to create jobs. But if the government hadn't intervened, then I would have to say that it depends on the situation. If the economy is seriously in need of some jobs then obviously we can't just sit there and watch ourselves go down the toilet. The government has to know when the economy has reached its limits of dealing without intervention in order to know when it is time to step in and take charge.
When the government spends more money, there is supposed to be more money flowing in the system. This helps creates jobs for the unemployed to help keep the government and its people pretty stable. This means that people who are unemployed may be able to find jobs and keep the money flowing, thus stimulating the economy. When the government spends more money, it means more government interference and takes away from a free market. Self correction is no longer an option anymore and so the deficit will go up. This will further increase our debt, but if we are smart work hard to get jobs for the unemployed, I feel that that will somehow stimulate the economy in the end.
ReplyDeleteI take Keynes’ side in the rap because first I think that Hayek is way too conservative. Keynes is being rational when he says that we will only help ourselves if we take action. People are suffering because they don’t have as much money and from sticky wages. I feel that the responsibility is ours and the governments’ as well. They need to be able to step in when their nation is in trouble, which is now. Self correction will only work if the government is willing to give money to those markets first so they can hire more workers and decrease the national unemployment.
I think that the federal government should use tax money to help create more jobs for us. They are the ones who lead our nation, therefore they should be the ones responsible for all of us. They need to do whatever they can do o help, even if it means cutting into the tax money. They should not give too much out though, because then everyone will start taking advantage of it. (the unemployed actually are taking advantage of the government through all of their benefits anyways) The main idea is that they should intervene to a certain point, so they can jumpstart this dreadful economy.
1. When government increases their spending in order to stimulate the economy it is often counteractive because during a recession the MPC decreases and the MPS increases because people want to hold on to all the money they can, and further the small remaining fraction of the MPC is split in half, with half of the money going towards paying off debt rather than buying new things and stimulating the economy. On paper it is a good theory but in real life it just doesn't work.
ReplyDelete2. if i had to side with one i would say Keynes because the government cannot be totally withdrawn from the process of fixing the economy, but i don't fully back Keynes because just throwing money into the streets and telling people to spend it doesn't work either, some money should be injected to help things get rolling again but the government should instead use the money to resolve debts, maybe if they gave the money to loaners to take out debt, then injected some money it would work because there would be an increased MPC because people wouldn't have to pay off debt, and once some people started spending again, more and more people would until the economy made a recovery.
3. I think that the government should spend tax payer money to create jobs but the way they go about it is wrong, if you refer to my answer for question number 2, i believe that would work better, but government definitely needs to be put in charge of spending money because the general mass of people in America are just stupid, they don't know how to spend, save or manage their money.
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ReplyDelete1) When the government increases it’s spending to help those who are hurt by the recession, the money flow in the economy also increases. This method of helping jobless people is a good way because it creates jobs and stimulates our economy. Obama did this with his stimulus packages, with the government funds creating new job opportunities. Unfortunately, the current financial stimulus packages are creating even more debt for our country because the current administration is spending inexistent money.
ReplyDelete2) In the “Rap Battle” I would have to take the side of Keynes because his point of view shows the current troubles. Unless our government is willing to take action and do something about the recession that our economy has fallen into then there is nothing that we should be looking for. The government has gone through cycles with tax increases to relieve debt, and then tax cuts to relieve the people, then back to tax increases to relieve the forever growing debt that the current administration has perpetuated just in the last year! So as I think about this, both Keynes and Hayek have good arguments. Keynes suggests that we need stimulus packages to help our falling economy, which is true, but in the long run this will only hurt our economy and government even more by increasing the total debt. Then Hayek suggests that government spending is not the answer either, because it will also increase the debt, but opposite to Keynes, in the long run this will hopefully if the right actions are taken and in a timely matter, will decrease the debt or somewhat help in the rebuilding of our economy.
3) I believe that the government should use the taxpayer’s money to create jobs for the unemployed. This is said only on the fact that the government only intervenes on a low level and doesn’t raise the taxes of the unemployed, let alone the employed. Another expectation that our government should meet when using our money to create jobs is to create jobs that are decent and long lasting. None of these construction jobs are long lasting unless you’re the owner which is extremely unlikely job position for an unemployed person to walk into on the first day. We need jobs that will be there a year from now, and years from now; the unemployed need jobs (metaphorically) for life! The government is increasing taxes thinking that will help create jobs for the unemployed. Sorry, that won’t work, the unemployed can’t pay this higher tax, that’s why they’re unemployed and looking for a new loyal, and trustworthy job in the first place. So I believe the government needs to focus on making better and more long lasting, definite jobs with our tax money. Yes, this may mean less jobs, but in the long run there will still be millions of jobs created giving the current unemployed an income, which is spent on goods, which in turn stimulates the economy in one big cycle, which is what we’ve NEEDED since the beginning. (one man’s spending is another man’s income).
1.) This video is stating that attempting to stimulate the economy and increasing government spending actually makes the economy worse. Both sides of this argument have some true aspects. The video at one point says that a stimulus package would decrease the confidence of the entire country. This would then cause people to save their money rather than spending it which would in make the economy even worse.
ReplyDelete2.) If I had to choose between Hayek and Keynes I would side with Hayek. This is because I agree with Hayek in the area of government intervention. I believe there are times when the government must step in and help in crucial situations, and this argument generally agrees with Hayek’s ideas and theories.
3.) For this question, personally, it is hard to choose one specific side. I don’t feel that the government should always have to intervene; there are some situations in which the government must let the problem fix itself. So therefore feel that a stimulus package should only be used in extreme measures, or as a last resort. Once it reaches this extreme point the government should create jobs for people using tax payer money.
1. It “injects” extra aggregate demand into the economy which allows a stimulus increase that aids all those who are unemployed when a recession occurs. John Maynard Keynes was a big advocate of this type of spending in times of need while Friedrich Hayek argued that government intervention always made the economy worse because no regulation of the economy always helped country bounce back in the past.
ReplyDelete2. I would have to side with John Maynard Keynes in the video, but only because of the rcent work Obama has been doing and because of the work FDR did during the 30s. THe opposing view of Keynes brings up many good arguments about how when the economy wasn't being regulated in the past, it was able to revive itself after recession easily. However, during the Depression the government needed to help out the economy because otherwise people would lose in faith in the government. FDR helped the nation recover duirng both a depression and a war. This allowed the American epople to restore their faith in the government and lead to a national movement supporting both the government and the war. Obama is trying to do the same thing right now and while America doesn;t necessarily agree with his current actions right now, they will in time.
3. I don't believe that it is a smart choice to use the taxpayer's money when taking actions such as these to help the eocnomy. People are already suffering greatly due to the recession and it would be pointless to take away more of their money and bring them into more pain during this difficult time. It will only make people angry with the government and cause government to lose its national support.
1) An increase in government spending would lead the aggregate demand line to shift rightward, increasing the price level and real GDP. People would have more money; therefore more people would buy and sell, stimulating the economy. The businesses would take in more money, therefore hiring more workers, lowering unemployment. With more people having jobs, everyone would have more money, and everyone would be better off. However, this money the government spends needs to come from somewhere. If the government doesn’t have this money and needs to borrow it from somewhere, it increases deficits.
ReplyDelete2) In a government with no national debt, I would definitely side with Keynes. However here in the United States, we have a massive national debt. I don’t think that the marginal benefit of stimulating the economy fully is greater than the marginal cost of borrowing billions, possibly trillions, of dollars. This would only increase the national debt to further outrageous amounts. This, instead of increasing optimism in the economy, might create doubt in consumers, causing the opposite of the desired effect. So, for the economy of the United States, I would have to agree with Hayek just because the United States does not have the money for the spending required by Keynes’ point of view.
3) I believe to a certain extent that it is the government’s job to use taxpayers’ money to create jobs. The government’s job is to work for the people and do what it can to help the people it serves. If the economy is in a recession or depression, it is in the best interest of the people to create jobs to boost the economy. If the economy stays in a lowly state, the people will have bigger problems to worry about than the fact that their money isn’t going to education or health care. For the greater good of all the people in the United States, the government should create jobs with taxpayers’ money.
1. When government increases spending to help people that are hurt by the recession, it is suppose to help our economy bounce back. There will be more money readily available and then people will start spending more. The people that are hurt because of the recession including the unemployed will have more chances of finding jobs and in-turn they will get paid and have more money to spend and the cycle will continue. Some people think that helping the economy is only going to make it worse. That is a very liable argument because there are many recessions that have bounced back by itself without government intervention. The recession we are facing today is breaking many records and needs some help to get it back to its potential. It might reach its fullest potential but at least it’s something.
ReplyDelete2. I would like to side with Keynes because the government needs to help the economy. There are many families that use to live a perfectly normal life and are now having to shop at thrift stores and make lots of budget cuts. People are being paid less for the same job because employers don’t have enough money to keep their business running. Many have closed and filed for bankruptcy. Clearly the recession has been going on for a few years now and none of the markets have started to correct themselves. The government needs to intervene and help the economy and create more jobs for people.
3. I think that the government should use the taxpayer money because the government needs to stimulate the economy significantly in order to even have the potential to survive. We need more money in circulation and we need to put an end to this recession.
In theory, an increase in government spending is supposed to increase aggregate demand, thus increasing the demand for labor and reduce unemployment. This is because government spending, along with consumption, investment and next exports make up the GDP; government spending is the only part of the GDP that can be influenced by the government—it cannot force people to spend money to increase consumption or investment, or force companies to make more products to increase net exports. Of course, the consequence of increased government spending is a budget deficit and an increase in the national debt because rarely does the government running a budget surplus. This consequence is weighed against the prospect of a shrinking economy that could last for years to come.
ReplyDeleteIn the rap battle, I would side with Keynes, and this is because throughout the video, the supporter of Hayek did not say anything that the representative of Keynes could not rebut. Also, the fundamental ideas of Hayek seemed shaky. I know that no economic theory is one hundred percent correct one hundred percent of the time, but the ideas of Keynes seemed fundamentally more sound than those of Hayek. It seemed as if the ideas of Hayek were more laissez-faire oriented, something I have never been a real fan of.
Finally, yes, I do believe it is the role of government to spend taxpayer dollars to create jobs. The government is there to help the people, and I think one of the most basic ways to help the people is to create jobs for them. Obviously, if the unemployment rate is low, then the government should be spending money on other matters that may be more pressing. However, in an economic situation like this one, I think that the government should be spending money on the creation of jobs to help the nation out of recession. I do not think the government should be financing a war when it could be helping Americans that cannot put food on their tables.
1. When the government spends money their goal is to increase the aggregate demand and the GDP. This gets more people interested in spending their money on goods and services and stimulates the economy. When the economy is stimulated companies can grow and profit, and if they are doing well enough they can expand and hire more workers and the unemployment rate will decline. This will typically work as planned as long as people spend enough of their money instead of saving all of it. If people end up saving their money then the economy will not have been stimulated and we would still find ourselves in a recession.
ReplyDelete2. I would side with Keynes on this because his ideas on helping the economy are ones that take effect immediately; they are things that help the people in need right away. We can’t keep waiting for the economy to bounce back because every time we find ourselves stuck in a recession it is one that was worse than the last, and who’s to say we will continue to bounce back, maybe this time we’ve gotten ourselves in way over our heads. So rather than wait for the economy to work itself out as some people feel is best, I think government action is necessary. It’s something that the government can do to help instead of just wait, and once they’ve done all they can they just have to hope that everyone else will do their part to get the economy back on track.
3. I believe it is the government’s job to use tax payers money to stimulate the economy and to create jobs for the unemployed. However, these jobs that are being created are ones that need to last. If the created job is one that will not last then once workers are finished they will just go back to being unemployed and that is a cycle we don’t want our workers to be in. We need jobs that will last and that will help people feel safe and secure with their finances.
Kris Chatterjee
ReplyDeleteThe whole point of government spending is to boost total aggregate demand and create jobs. As unemployment grows and people reduce their consumption, it is necessary for the government to replace that private spending with public spending. This public spending is a small price to pay as it secures more jobs and halts the economy from contracting further. One of Keynes’ major principles was that the economy is “inherently volatile”, which means it is capable of extreme damage. It is necessary to stop the avalanche of unemployment as early as possible instead of just waiting for the “volatile” economy to readjust itself. According to Hayek, the economy has gotten out of recessions without government help before and these scares are not worth billions of dollars in stimulus and adding to national debt. I believe that keeping less debt in the long run is not worth taking a chance on the economy. Keynes says it best when he says “in the long run we’ll be dead”. The economy can really bring a lot of pain to a lot of households and anything the government can do to quit the suffering, they should pursue. The economy is unpredictable and must be helped instead of hoping for a happy ending. It is important to bring economies to a full recovery, which is best achieved by stimuli. Government spending helps creating jobs and sticky wages, having more people at work and ready to spend themselves. Hayek argues that letting the market be “free” instead of “steering” them helps filter out the businesses and parts of the economy which are not strong enough or have made to many repetitive mistakes. Bailing these foundations out lets them go unpunished and allows them to continue functioning, which they should not. Keynes’ counterattacks, saying that in reality, recessions like these affect and punish everybody. I have to agree with Keynes’ on this also, as recessions really do affect everyone, even the uncorrupted. When my dad lost his job, he didn’t do anything wrong and there wasn’t much the owner could do if less and less customers would pay for his services. I also agree with Keynes when he says it is the government’s responsibility to protect the solace, confidence, and “animal spirit” of the country in order for the economy to bounce back and for progress to continue.
1.Usually, increasing G or government spending increases the GDP of a country which results in more production and a better economy. That might not always be the case because too much Government spending could bankrupt the entire country if it is uncontrolled and will screw everyone over in that country. But in most situations, it increases jobs because companies want their production to be increased in order to compete with other businesses.
ReplyDelete2. I would take the Keynesian side because in order to have a functioning economy you have to have leakages to and from the government because they ensure prosperity. If there was a failing company then the government would act upon that failing government quickly. Since it is the "animal spirit" that always acts upon instincts, it also is the one that usually survives instead of the passive economy. If we were just to say that the economy would fix itself in the long run then we would be waiting many years because the economy does not fix itself rapidly, it takes many years in order to fully restore itself. But if were to support the economy by paying for much of the things that need funding and cancel any unnecessary funding then the economy would be fixed faster than if it were just left alone.
3. NO doubt that the government does help the people in their time of need like when FDR created the WPA and the CCC in order to provide jobs in the Great Depression. He was the government and he provided tens of thousands of jobs for people that literally had nothing to live on and nothing to eat. If he had not of done that then today, we would not of fully recovered from it and many would still be in poverty and more would die. Not only that but there would be revolution because the recently deprived citizens would seee the government as being lazy and uncaring because they did not act upon their instincts and help them. So if there was not government intervention and provisions for the people then many would be poor and the rest would be poorer or dead.
1. When the government increases their spending they stop the downward slump in the economy to not worsen. they allow people to temporarily increase spending for a regrowth period when people can find work and begin spending again.
ReplyDelete2. i would take keynes side purely because it has been working recently, and yes it could prevent future growth but for now it is working and using history as a reference cannot predict the future, especially in a capitalist economy. but keynes had a good idea in how to run an economy and as long as the government stays on their toes everyone should be okay.
3. i think they should do what is necessary, and it is their job to do so. you can say no they should not spend it to create jobs but before you say that put yourself in the shoes of a person who doesnt have a job and is turning to the government to create one for them so they can survive. im sure if you are not one of those people affected by a recession you do not want the government to intervene and spend tax payer money, but once the taxes are given to the government it is then their money to spend and what to spend it on so deal with it, they are doing what they think is best for the greater good of the people and economy.
1. When the government increases spending the arrogate demand line shifts right increasing the real GDP. By doing this it allows more money to flow in the economy causing more jobs for unemployed people. But with every positive comes a negative. The increase in government spending causes the debt to increase and farers the economy into the recession. So we become stuck in a struggle between getting people jobs or make the debt even greater. So it’s becomes debate on how much government intervention is needed to get out of the debt 2.Now I’m not total for Hayek or Keynesian because they both make good points. Hayek wants the government to step away form the market and let it self correct its self but Keynesian doesn’t want to wait and allow people to suffer through a recession. I like Hayek’s idea because it allows the market to make a mistake and have to learn form it. If the government always bales out companies the problem isn’t really fixed, it’s more covered up then anything. Part of the self correcting method is that some companies in the market will fail and only the strong companies will get off the recession.3. I think it is a good idea that the government spends our money to create jobs because it’s better to have a job paying minimum wages then having no income at all. If we take some of the tax payers money to create jobs it will overall help the economy because more people are employed and it will kick start the economy out of the recession. The government is doing what it necessary for economy to survive.
ReplyDelete1.Keynes believed that when you spend more money the aggregate demand will increase and this will stimulate the economy because the output and price level are increasing and people will overall have more money. This would also cause an increase of the demand for workers; which would help the unemployment issue. However Hayek believes that the economy is pretty good at bouncing back on its own and spending more money will just cause more problems.
ReplyDelete2. I think I would side with Keynesian on this one because he seems like a smart guy and he knows what he’s doing. I also think that his idea of spending money to make money is pretty brilliant and it has seemed to have a pretty good affect. I also do not think that Hayek has enough information to back him up that Keynes’s theory won’t work just because it may not have worked in previous recessions, things are different now.
3. I agree with what other people are saying about how the government should intervene but to an extent. I think that it is the job of the government to give us a boost and to get us started with creating if we need it but that everything else should work itself out. If we all become too dependent on the government to do everything for us, then how are we going to be able to fix things on our own?
1) While the increased government spending will bring more jobs, but it'll also raise national debt and taxes. So it's pretty much a gamble that the government must take because whichever decision they choose it'll come at a great cost.
ReplyDeleteHowever the best choice is to pick Keyne's side and boost the economy with more spending. Right now the national debt problem is virtually unsolveable and it'll continue to grow worse even if the government cut spending because of interest that is added onto the debt. However the recession is in theory solveable and instead of letting people suffer for a more prolonged period, it would be better to end the misery, get our economy is good shape again, and let the unemployed find jobs. If the government doesn't increase spending then the recession could possibly drag on for another decade not to metion the debt would still be enormous.
2) Keyne's side would be a more ideal side to take because the recession might be far from over and the public would complain and be in an outrage if the recession actually got worse. The public want to be reassured and have trust in their government. They do not want to hear that the government thinks that following some foreign economonist's advice in which the government does nothing to prevent and possibly end unemployment and poor wages and sticky prices is a good idea. Right now they want the economy to be stable again and if that means we add more to our troubled debt then it should happen.
3) Yes of course, otherwise who else would do it? Without taxpayer money they wouldn't be able to fund it any other way and it is necessary for jobs to be created due to our increasing population.
1) An increase in government spending would force the aggregate demand line to shift right, increasing the price level and real GDP. People would have more money, and then buy more things. There would be more money made with businesses and in return more hires. With more people having jobs, everyone would have more money, and everyone would be better off. The money the government spends has to come from somewhere or else there will be an increase in deficits.
ReplyDelete2) Normally I would agree with Keynes, but our country does have debt. So in our United States government I would side with Hayek. The government does need to intervene in certain situations because society is not properly educated to do so, on its own. Therefore, Hayek’s reasoning is more logical for the US.
3) To a certain extent I agree with this logic. The government does work for the people, and in return they need to do what is best for the people. If taking their money and creating jobs is best, then that is what they should do. Especially if the country is in a recession or depression, the government needs to take matters into their own hands and start creating jobs for people so that there is more money.
1) When government spending increases so does the GDP. If we hold true to the fact that an increase in the GDP will increase demand, then theoretically the government spending more could help us. Sure, it may cause the national debt to increase, but the U.S. is never going to be able to pay off their debt, so we may as well increase the deficits now so that we may have people spend more, and if getting demand up will cause the economy to move quicker again, then it is worth it even if we may have a long run debt. The government must get us out of the recession, or else we may have no future, so I would rather have a future filled with worrying about national debt than no future at all.
ReplyDelete2) I agree with the Keynes side of the rap, because although the people have to do some correction, there is not going to be some magical stimulus into the economy that saves us all. We need the government to stop making promises to help us, the people, and then breaking these promises once they get in office. With government intervention America may be able to bounce back from these times of economic hardship, because they could create stimuli (stimuleses?) for the businesses like GM that have tons of American workers and they could afford to pay their labor more which would then cause us to have a healthier economy and get out of the recession.
3) I believe that it is indeed the job of the government to create jobs for the people from tax money, because if they just pocket the money than the economy will receive no help and this situation we are currently in will keep on spiraling downwards. I believe that the government should take some notes on what FDR was able to do during his time as president during the Great Depression and create some jobs for people by bringing back things like the C.C.C. American government needs to take the money that we the people are giving them and create jobs to help us out during our times of need. Without the help of the government, I believe America is heading down a horrible path.
When the government increases spending to help people hurt by the recession, it raises taxes and also adds to the national debt. They are taxing more, but money is still being spent and they are using the revenues as an excuse to say they are making more money, thus they can spend more. It is difficult for me to pick a side and commit to it completely. I think both sides have a good point and sometimes government intervention is necessary, but other times it is better to just let the economy take its course. There will be times when it will be rough in the economy, however, there will also be times where the economy is doing well. I believe both sides are very extreme and very opposite, so a mixture of both is beneficial. Also, I don’t think all tax money should be spent on creating new jobs in tough times, but that is not the sole reason for taxes. So, to spend all the money on creating new jobs isn’t necessarily the best option, in my opinion.
ReplyDelete1. If government intervenes to increase its spending money in an attempt to help the people hurt in the recession, more money will enter the system and the aggregate demand will move right; this will increase the real GDP and thus, decrease unemployment. Yes, it sounds like an ideal plan but what would the consequences be? The deficit will increase and even if the problem were to be solved, it will only be temporary, and in the long term, this debt may cause the government to fall into another big hole of recession.
ReplyDelete2. In this rap battle I would have to disagree with Keynes’s side and say that government intervention is not always the solution. I believe that some support from government may be needed at times, but like the cartoon we had on one of our extra credit packets stated, the government’s best “remedy” could be to just let it be. If government’s help had been the solution, then this recession should not be happening right now. The government has already done much of their share and I think it is time that we let things go and see how it fixes itself instead of making matters worse by screwing it around.
3. I have some mixed feelings about the federal government spending taxpayer money to create jobs. I feel that using money from people who are already working hard with their jobs in order to create jobs would be unfair. But at the same time it’s not the jobless people’s fault they don’t have a job (except for hobo people who choose to be bums and don’t go out to look for jobs) and they should receive opportunities to find one. And in order to create these opportunities, we need money – hence the taxes. That’s why I don’t think I have a strong stand on either of the side for this problem and I don’t have an exact answer to this question.
1. When the government increases spending demand will shift right, increasing prices and output. This will cause more money flow in the economy. Then more jobs will become available because employers have more money to give to workers, which helps unemployment. However, when this happens it causes the nations deficit to increase. Then the nations debt will increase and will go right back to where it started.
ReplyDelete2. I’m undecided upon which side I would take for the simple reason that the government is necessary, but to a certain extent. Hayek is a little dramatic when he says that the government should never step in. I think that the government should step in and help the economy but to a certain point. I say this because the government has not always done the best job of helping our economy. The main purpose is to help the economy and the families suffering from it and if that’s what the government is going to try and help why would anyone put a complete stop to it?
3. I believe that that government should spend taxpayer’s money to create jobs when it is necessary. If the economy is working itself out on its own then there should be no need for the government to step in. Once we reach a point to where we need that extra help then the government can step in and help people find jobs. The extra jobs with decrease unemployment and hopefully help in the long run. I guess it just depends on what the economy needs and the current conditions.
1) An increase in government spending is supposed to increase aggregate demand by lowering unemployment and creating more jobs.
ReplyDelete2) I would take Hayek’s side. As Roberts points out, an increase in government spending may seem like an easy fix but it could easily end up hurting the economy instead. In the long run the economy will correct itself. There will no doubt be many people hurt by this hands-off approach but that is the way of economics: you can’t please everyone. And with the inefficiency of our bureaucracy, much of the stimulus would be eaten up by special interest groups rather than helping the people themselves. Thus the economy would not be helped and our federal debt would go through the roof. And not to be cynical, but this may be just what the American public needs to help them realize how complacent they have become, courtesy of their seemingly unlimited credit in the past couple years. As the article from a few blogs ago said, America needs a wake-up call to realize that they are not infallible.
3) I do not believe that it is the role of the federal government to spend taxpayer money to create jobs. The economy will correct itself eventually. Spending money on creating jobs will never be all that efficient and it is just digging a deeper hole to climb out of in the future. However I do acknowledge that my opinions are influenced greatly by my own life/social standing. Living in suburbia, I am fortunate enough to be sheltered me from the worst of the economic crisis. If I were living in Michigan with two laid-off parents, my opinion would no doubt be very different.
When the government incrases its spending, it increases the aggregate demand causing a stimulus to take place in the economy, granting people their jobs back and overall consumption (GDP) to increase. If the government is to cut taxes, the result would not be as predictable because there is no way to tell if the public would save the money or spend it. Therefore increasing government spending would be the designated step in order to stimulate the economy as fast and efficiently as possible.
ReplyDeleteI would definetely take Keynes's side because the other guy's solution is to just let people suffer until the economy can finally fix itself and theres no telling when that might be. I think that the more democratic tactic is better because it benefits everyone, including the people who have done nothing to deserve the punishment the man in the video talks about. It seems like Hayek's policy doesn't grant the public any type of security, I think the government has a duty to make sure that everything in its society is functioning, especially the economy. Although Hayek's theory might sound good on paper one must consider the lives of all the people suffering in poverty.
Yes, I think that the tax money is essentially to help the government do its job and I believe that the government's job is, once again, to assure that the economy is functioning well. If the money is not being used for this then I don't know what else it could be used for. Government spending will benefit everyone. If the economy is left to correct itself, unemployment could skyrocket and turn into a depression and the government should not allow that to happen. The government should be a friend to its people and should not ignore their needs, especially in a democracy.
1. The reason government increases its spending is because it is trying to generate more money flowing into the economy. And with more money in the economy, consumers tend start spending which that money goes directly to large business. This leads to more jobs being created and lower unemployment rate. As mentioned in the video this is one of the reasons Keynes was a big believer in government stimulus packages.
ReplyDelete2. I would agree with Keynes theory because instead of just sitting back and watching the economy naturally bounce back we would initiate a plan to help fix our economy sooner rather than later. Since of the significant number of families that would struggle without jobs or income that would have to wait till the economy plays out. Government would have to take responsibility in spending money in the right areas and spend money wrongfully which would allow the economy to worsen.
3. I think government should be allowed to spend tax payer money on creating jobs because it is the governments responsibility to maintain the economy healthy. In taking that responsibility they should be able to take any actions necessary to benefit the economy and authorized to use resources such as tax payer’s money. Creating jobs is the first step of getting any economy to the right track, and this is essentially giving back to the taxpayer.
1. When the government increases its spending to help people hurt by the recession, it shifts the aggregate demand to the right. It is supposed to be a stimulus to the economy, and boost it back to where it needs to be. But, it also increases the national deficit, and if the reaction you are expecting doesn’t happen, it could hurt the country.
ReplyDelete2. I can see where both sides are coming from, but I think I would mainly agree with Hayek. I do think that when there is recession, or a slump in the economy, there are times when government can interfere slightly. Simply because when so many people are suffering it is hard to not do anything about it. But, I do think the market needs to work on its own, and that it will always bounce back. When the government interferes, it often times succeeds in making things worse. It doesn’t seem right that what caused the problem is also what will get us out of it. The government often causes problems, and aren’t completely trustworthy to get out of problems. Your money is safer in your own hands, rather than giving it to the government so that they can decide what to do with it. It is hard to have people suffering, and I think a lot of times something does need to be done. But, at the same time, the government usually doesn’t actually succeed in solving any problems. Although it is hard, I think that the economy will always bounce back, even though it may take more time than we want at times.
3. I don’t think that it is the role of the government to use taxpayer money to create jobs. People are already hurting from the recession, and for the government to take even MORE tax money from people so that they can spend it is not the right thing to do. I do think something must be done to help unemployment, but not this. People are not going to be able to give up that extra bit of money when they are suffering enough to the government who may not actually do anything to help the problem.
When the government increases it’s spending to help out the economy the aggregate demand of the country increases and goes up. There is more money in the economy and while inflation rates will go up slightly. The point is to try to get unemployment rates down so the economy will be stimulated and the market will start to get corrected. This step to stimulate the economy will try to prevent the economy from a continuing downward slope into the positive direction. Many people disagree with this philosophy, the Keynes philosophy, is because that they believe the government is intervening shouldn’t be allowed in a free market economy. I believe that the government should intervene in the economy before the economy is in a full contraction. The government should intervene while it starts on the downward slope. I believe that if the government does not help to correct the market that it will take much longer for it to correct itself then without help. I feel that an economy that is left to fix itself will only get worse as there is nothing to stop the unemployment rate from increasing. I think the government should be allowed to spend tax payers money to help create jobs in rough times. The government’s job is to protect its people and I feel that helping creating jobs would fall under this. I do however feel that there should be a limit on how much they spend because I feel that too much spent on this will hurt the government as well. We do not want the national debt to get to out of control and if we spend billions and billions to create jobs that will happen.
ReplyDeleteWhen the government increases it’s spending it also increases the Price Level and the real GDP. Therefore demand for products would go up and because people now have more money, they would be spending more money. Because people are spending so much places would have more money and be able to hire more people. But although more people have jobs, taxes will be raised and so will debt. Bringing us into a recession. There is always a good and a bad to everything. Whether they do it or not would be taking a chance because like I said it would give more unemployed people jobs but at the same time it would be bringing us into a recession.
ReplyDeleteI personally am not going to side with one or the other because I believe that they both bring up good points. Although it could be a good idea for the government to intervene, it may also be a good idea if they just leave the economy alone and let it take its own course and fix itself. I think that the government has been a lot of talk and not a lot of do and it should be hard for us to trust them because they never follow through with what they say so the government should just let it go but at the same time if the government actually did what they say they would do then they should help. I think both would have positive and negative effects on the economy it would just all depend on who has the best positive effects and who has the worse negative effects.
I do agree almost one hundred percent because if they don’t do it, who else will? We Aren’t just going to hand out our money so that other people can have jobs. The government is here to help and I think that when unemployment is high they could give us a little help to create more jobs.
1)If government increased spending the aggregate demand line would shift right increasing the price level and output. It would help businesses and people because there would be more money flow in the economy. As a result to the increase in money supply, there would be more jobs in the economy and more people would have jobs but eventually in the long run, it would just lead the government into more debt than they already have.
ReplyDelete2)If I had to pick a side I think I would pick Keynes side because I believe that the government needs to help with economy. They need to help the people find jobs and help the whole national get out of debt which in all reality it will never completely happen but I do believe that the government should help us get out of this economic debt just like Keynes thinks.
3)Finally, I do think it is the government job to spend the tax payer’s money to create new jobs because it would help out economy and the people in our nation. I think the government’s job is to help the people in any way they can and one way they can is create jobs. So many Americans are unemployed because of the horrible economy and if the government creates jobs, I think it will even help the economy in the future if the government starts using the tax payers money to create new jobs for people unemployed.
1. Government spending would increase the aggregate demand which stimulates spending in the economy which is supposed to create more jobs and bring the economy out of the recession it is in. This is Keynes’s view on what is best for an economic crisis, and is very similar to our current stimulus plan.
ReplyDelete2. Hayek, I don’t see the past Keynsian-like plans (FDR’s and Obama’s) as being at all helpful, perhaps even worsening for the economy. The ideal idea of Keynsian policies is really to boost confidence in the economy, which we really have no control over. People will be timid to spend during a recession even with government spending increasing, and can easily backfire to increase the debt further if confidence isn’t raised. Hayek believe that the economy would naturally bring itself back to a balanced full employment rate, which I agree with. Keynsians are simply too impatient with the economy and want instant spending and fixture, however is unrealistic and hasn’t proven to be successful through our past.
3. No, especially not in a capitalist society. In this case spending would perhaps even decrease: The government takes away money from those who are making it, causing them to spend less and worsen the economy further. Also, there’s always going to be the economic free-loaders who decide that welfare can pay them more than a below-average job, who live off people who work hard for their money. This policy is a very socialist-appealing and if anything has been proven though past government systems it is that socialism, though the prototype of it is flawless, never works out.
1. When Government increases spending, ideally it is supposed to increase the Aggregate Demand. Which theoretically speaking would increase the demand for labor therefore would decrease the unemployment rate by having more jobs available. Overall this would mean people will have more money which they could spend, stimulating the economy. However there is one major issue with this and that is when government increases spending, the deficits also increase. Which means the dept would increase too, leading us right back to a recession.
ReplyDelete2. I think both Hayek and Keynes both have good views, however if I had to choose just one of the two I would choose Keynes. My reasoning behind that is he believes the government needs to help the economy. Meaning the economy should have to help the government. I believe that the government however is helping somewhat but not to its full potential. The government does supply money to the families that are unemployed and are seeking jobs, which is a start. However, Keynes also believed that we will never fully recover from a recession. I completely agree because when our country is in a recession we can never fully recover and return the economy back to the way it was before that recession happened. Overall, I believe that Keynes did face the possibilities of today, and recognized sometimes things are too rough and the government has to be involved because there is a point in which the economy and people cannot take anymore.
3. I do strongly believe it is the federal governments job to create job opportunities with tax payers money. I believe that due to the recession the economy cannot bounce back on its own. It does need help, which is where the government should spend our money to create jobs to help people overall get out of this recession.
1.When there is an increase in government spending, it shifts the aggregate demand to the right. Businesses will have more money and it could help us get out of the recession. The only downside to increasing government spending is that taxes will go up because that is the only way the goverment can get money. Although, the increase in taxes may seem scary, it will be necessary to escape from the recession.
ReplyDelete2. I somewhat aggree with Keynes in this side of the rap battle. I think goverment intervention can help us when absolutely necessary. Otherwise,I believe that the economy when left alone will self correct. Ultimately it is up to the people in our society to make more smarter decisions so we do not get ourselves into bad situations.
3. I believe it is the goverments responsibility to spend tax payers money in order to create jobs when the country is struggling. We are the ones that voted for them so we trust them to make the right decisions. One of the hardest decisions the goverment has to make is whether or not to intervene, but whatever decision they make, we should trust them to make it work.
I mostly disagree with Keynes and his happy go lucky spending thrift ideas. I believe we do need to spend some money and take some risk if we want our economy to prosper, but at a certain extent. Now, Keynes thinks that our expectations may constrict the economy and possibly keep it that way. He thinks that when this happens the government should spend more money to get it back on track. This is wrong because this is the reason why we get into a recession in the first place, so why would we repeat what got us into our deficit in hope it will get us out. If we continue to spend like Keynes wants us to then we would never be out of a deficit because by the time we make enough money to get us out the world will end. The deficit increases from this along with prices and that is how we end up where we are today, with inflation. The high prices from inflation bring spending to a halt and that way no one can obtain money. Spending more money to make money is a risk and we have taken that risk with greater and greater amounts of money and each time we have failed and increased the deficit by more and more. The government should help us create jobs in a way they’re not intervening with our current jobs or the deficit. We more than the government do need to help ourselves because the government is corrupt and so are the CEO’s of most companies. Although most people would rather stay on unemployment instead of finding themselves a job that does not pay them 50 dollars an hour. The reason Keynes theory does not work for the most part is because America is lackadaisical
ReplyDelete1. There are both positives and negatives that could result from government spending. The positives include increased employment and production, as well as increased consumer confidence. The negatives include possible wasted spending, large spending deficits and increased inflation. The guarantee of government spending is increased aggregate demand and therefore higher price levels, what is hoped is that the newly employed population can afford the higher prices and can create goods that will balance out the deficits in the end.
ReplyDelete2. I agree that unlike before the country today is too large to fix itself, however I feel that spending has also gotten out of control. The basic idea of free markets and self fixing has led to corruption in the financial markets, but spending could irrevocably damage the deficit. There are so many moving pieces in the modern economy that I feel myself constantly torn between opinions. In the end I think that the government should just leave the country alone, and if the economy shrinks greatly so be it. I have always been a saver, and that kind of economy would benefit me.
3. I believe that the federal government should commit to either a very strict taxing policy or very loose one. Either we tax incredibly on the rich and shift to a much more controlled economy, or we leave everybody alone and let the strongest survive. The U.S. has for too long played a game trying to balance things out and everybody is angry, we should just choose one part to make happy and deal with it.
1. When there is an increase in government spending in our economy, that usually means that the government is trying to intervene and give our slumping economy that jump start it needs to get back to where it needs to be. It ultimately will shift the ever so important aggregate demand line to the right in an attempt to increase spending amongst the people. This in turn will help stimulate this economy and get people back to work and out of their dreadful recessions.
ReplyDelete2. If I were forced to choose one side of the argument, I would be forced to side with Kaynes on the issue because I feel that his methods will ultimately be the most effective way to stimulate a struggling economy. Even there is a lot of upside to the self-correction methods; the main problem that comes with his method is the ever so important time factor. These people need help now or else they are not going to be able to make it. If done properly, an economy that was intervened with will end up on the upside in due time and will be able to help cut some of that government deficit check.
3. Yes I definitely believe that it is the job of our federal government to spend all of that tax money on something that would help our economy in the long run. And if creating jobs is the best way to do it then that is what they should do. They have to be out there creating new opportunities for all of those unemployed, struggling workers out there to get back on their feet and have them able to support their families from now on. This is what is going to get our economy back to where it should be. And that is what the government should be spending our hard earned tax money on.
1. Government spending is used in order to stimulate the economy and create jobs. Although it does create many jobs its sometimes can have a negative affect on an economy in the long run. If the consumers dont spend enough of the money they get from their new jobs alot of debt will be accumulated and The united states will be in trouble in the future.
ReplyDelete2. I dont like the idea of government spending because it is too risky. It is very hard to pick the amount of money to spend in order for this method to be affective. It is too big of a risk and if it goes wrong it will be bad for everyone in the united states as opposed to it being bad right now for those unemployed. The
US could be damaged terribly if the governemnt spending does not work out.
3. I dont think the goverment should tax people to create jobs for others. Although many unemployed have found themselves in a bad spot others are just lazy. Why should those who have worked hard have to pay money to give others jobs? Instead they should be able to use that money and save it for the future. This can help them avoid getting in trouble financially later on.
As the government increases its spending, the economy should respond by producing more jobs as more money flows through. Although this does happen and temporarily jumpstarts the economy, the long run effect is that the nations debt increases from that spending causing problems for future generations. On this topic I sign with Hayek. I do so in the belief that governments add too many special interests into a stimulus package rather than concentrating on what is going to help the economy. This was mentioned in the video as well as the shock recovery where the economy will recover but not as strong as it was before. I see this like a major injury, yes you recover but you won’t have the same abilities that you had before the injury. I do feel that the government should spend taxpayer money on economic recovery by creating jobs. If the money is used correctly it should end back with the taxpayers who paid for it to begin with. If taxpayer money isn’t spent then the government will borrow more money thus increasing the national debt
ReplyDelete1) As the government increases its spending to help people hurt by a recession, the AD line shifts right in the short run. This shift in aggregate demand causes an increase in the GDP and also an increase in PL (price level). But by spending this money the government is creating a bigger debt and in the long run the government and the people will be hurt financially.
ReplyDelete2) I am definitely on the side of Hayek. Hayek believed that government intervention should be limited and that to me is important, because when government starts intervening they only seem to cause more problems, even if right away they are not known to the public. If government tried to intervene the only thing they could do is either give another tax cut or increase taxes, but either way tax payers are the ones paying for all the changes.
3) I think the idea is a really great one, but the thing is there are people that do not pay taxes and are getting jobs created for them! That seems a little unfair to everyone else who are hard-working individuals. I think what really needs to happen is that the US needs to become a bit more self sufficient, and stop going else where for goods that can easily be made here. If the US started to be self sufficient, there would definitely be an increase in jobs available and also our debt can decrease.
When the government starts spending more and more money on the economy, they are trying to flush out tge economy with this money to try and get the economy to kickstart and get back into its normal swing. However what they also jumpstart is the ever increasing national debt, snice they don't actually have this money in the first place.
ReplyDeleteIn the battle between Hayek and Keynes, I'm going to have to side with hayek on this one. Like Hammrick has pointed out, there is no definite answer as to how much momey should be added, and exactly where to send this money is also unknown. It would be a lot easier for us to just ride out the storm in this case. By the government not doing anything, they would limit the number of people that could possibly be hurt by a government-made mistake, but also, they would relieve some of the tension between themselves and the people, who as of late have been quick to criticize government officials.
I think this could be a good idea to use the taxpayer's money to try and create jobs in the US. But it goes back to the last issue as well: what if the government messes up? Then this tax money is lost, and even less jobs are created, and there is even more debt. Yes, in an ideal world, this would be a sure-fire idea. But unfortunately, not everything in this world is ideal, and there are definate loopholes in the system, in which this tax money may fall out. As Sofiya pointed out, there are certain people that live in this country that do not pay taxes, yet reap the benefits of what tax money brings in, and this is a definate problem.
Government spending during a recession is used to increase aggregate demand and therefore increase employment at least in the short run. This sounds good but in the long run this will also lead to increased inflation. As to my opinion as to who is correct I would have to side with Keynes. Hayek is correct in his belief that the market will eventually balance out but when and how this comes about is not for certain. I personally want the economy to improve within my lifetime and in a way that is not completely left to chance. Blindly spending to boost the economy is obviously foolish yet the idea of doing nothing and hoping for the best is insane. Ideally smart regulation along with minor rainy day spending to compensate for unforeseen troubles should be all that is needed to stabilize the markets. What I would really like to see is a more involved regulatory agency to help prevent market crashes in the first place and perhaps even a government surplus set aside for the occasional rainy day.
ReplyDeleteIt is not the role of the government to insure the employment of every citizen that is communism. That said it would be nice to see the government work to help make the economy a little more reliable and a little less hostile.
1) Like most of my classmates, I agree that the more money the government spends to bigger hole we dig for ourselves. Although the money that is spent helps for a little while, in the long run the money just adds up and expands the National Debt which really hurts our economy the most.
ReplyDelete2) If I had to choose between Keynes and Hayek I would side with Keynes. Although I do believe that there should not be a lot of government intervention and that the American people are somewhat responsible for our situation; Keynes was able to back up his words which Hayek was not. I would trust Keynes a lot more because he clearly thinks things through and completely understands the situation.
3) As long as the tax payers’ money is being used specifically for creating jobs then I am all for our money being spent for that purpose. However, I do not think that the government should spend billions upon billions of dollars for that sole purpose.
When the Government increases spending it appears to help at least in the short run. Like Robert Skidelsky said Keynes would want more stimulus, and his reasoning would be that the current stimulus has “slowed the slide”, but has not solved the problem. I don’t agree with more government spending because it means that as a nation we have to borrow more money and thus increase our deficit. In the short run this gets the economy started again, which is good, but then we have to pay off our debt. Where will that money come from? Well the government would have to increase taxes (lower demand and unemployment) causing the economy to be back where it started. This is where Keynes theory goes down the tubes because Keynes did not account for long run, and I believe is because his attitude was “in the long run we are all dead”. I think that this means ‘in the long run I AM dead’ which means I don’t care about the long run because I won’t be there. This has been the attitude of many for a long time and has been a factor in building our deficit to over 10 trillion (10,000,000,000,000)! Keynes attitude has caused me to take Hayek’s side because Keynes ideas will make the economy go in a circle of “times are rough” to “things are looking up” and back to “life is hard”. Although basic economic theory says that economies to go through a cycle of highs and lows, I do not believe they are supposed to be as drastic as the great depression and the recession of today. In the rap video Hayek says that situations like the one we are in now are caused by low interest rates. Low interest rates cause people to believe they have money that doesn’t exist, it is just inflation that affects the size of their income. Hayek would say that the recession today was caused by the over use of credit cards and too many loans being taken out which both cause inflation. I believe that Hayek would be correct and I said so in the previous blog. It seems to me that the government is content on doing what they can to fix the economy by spending money. I believe they should spend money collected by taxes instead of money borrowed. Now since increasing taxes will not help stimulate the economy they must change what they spend the money on. I don’t know what it should or can be because I don’t see the whole picture, but I know that it needs to be done. This is the same problem the government faces today. They can’t cut social security, but at the same time they can’t afford it and they borrow money which is not helping the situation. To summarize what I have said Keynes ideas won’t help in the long run and Hayek has been right all along; the government wants to spend money, but can’t borrow and can’t use tax money. All in all we are in a really crappy situation.
ReplyDelete1) When the government increases spending in an economy, it uses expansionary policy to create more jobs. This is all in hope that the new jobs and the people's newfound security will stimulate demand and get the economy back into gear. This is a good tactic when there are stick wages, where the economy may not be able to right itself fast enough to avoid permanent damage.
ReplyDelete2) Personally, I believe that Keynes and Hayek's tactics and overall policies work best when used together. I do not believe that the government should alter the economy when the economy is doing fine, or ok. When the economy hits a recession and can pull through without government help then the government should stay out of it. But when sticky prices or embargoes severely interfere with our economy then government action should be taken. I am not against the government helping out the economy with a boost or putting a cap on inflation every once in a while, I just believe that this must be done sparingly. Altering the economy is dangerous business, as an outcome can be different than what was expected, and so messing with monetary/fiscal policy too much can hurt the economy more than just leaving it be in the first place.
3)When we pay our taxes (ahem, when my parents pay taxes:p) we put our trust in our government to use that money in a way that benefits the country. That is just how a government is run- I you don't like it, move somewhere else! No, don't move, let me just explain why allowing the government to correct the economy is helpful. If this did not happen, our financial situation would be much worse. If the economy changed in any way we could be in a downward spiral headed towards rock bottom. Rock bottom meaning financial ruin nationwide, I would rather just let the government help out the economy. This situation is possible, due to sticky wages and their tendency to raise unemployment levels and keep them high. Also, when the government creates jobs, they are helping out not only your fellow Americans, but when wages rise its helping out you too!