Challenges to liberalism: Economics

MODERN LIBERAL VS. NEO-CONSERVATIVE ECONOMIC POLICY

  • Modern liberals advocate for government intervention for equal opportunity.

  • Key figure: John Maynard Keynes.

  • Neo-conservatives prefer minimal government intervention.

  • Notable proponents: Friedrich Hayek, Milton Friedman.

REVIEW: SUPPLY & DEMAND

  • Supply: Products/services from producers.

  • Demand: Consumer wants/needs.

  • Scarcity: Limited resources leading to Demand > Supply.

ECONOMIC CYCLES

  • All economies experience boom and bust cycles.

  • Main goal: Sustainable, gradual growth.

  • Keynesians and Chicago School proponents differ in methods to achieve growth.

KEYNESIAN ECONOMICS

  • Response to boom/bust:

    • In recession: Lower taxes, increase spending, reduce interest rates (stimulate spending).

    • In boom: Raise taxes, decrease spending, increase interest rates (slow spending).

  • Government intervention is essential to manage economic health.

ANTI-KEYNES: THE CHICAGO SCHOOL

  • Rejects Keynesian principles; supports economic liberalization.

  • Advocates for reduced government size and spending.

  • Views boom-bust cycles as self-correcting.

NEO-CONSERVATISM

  • Emerged in the 20th century, reviving classical liberal economic ideals.

  • Aims for minimal government involvement; significant rise in the 1980s.

  • Support for tax cuts and deregulation.

TRICKLE-DOWN ECONOMICS & AUSTERITY

  • Trickle-down: Tax cuts for the wealthy to stimulate the economy.

  • Austerity: Cuts in government spending/taxes to reduce deficits, often increases unemployment.

1980S – RONALD REAGAN

  • Adopted laissez-faire policies influenced by Milton Friedman.

  • Key policies: De-regulation, tax cuts, and monetarism.

  • Achievements: Economic improvement, lower unemployment.

  • Failures: Increased income gap, tripling of national debt.

1980S – MARGARET THATCHER

  • Similar economic measures to Reagan; criticized for rising unemployment and poverty.

1980S – BRIAN MULRONEY

  • Canadian adaptation of Chicago School policies; privatization and deregulation efforts.

  • Introduced Goods and Services Tax (GST).

FAILURE OF LAISSEZ-FAIRE ECONOMICS

  • Historical issues with minimal regulation (e.g., Industrial Revolution, Great Depression, 2008 Crisis).

  • Economic problems often stemmed from lack of regulation and oversight.

WORLD FINANCIAL CRISIS (2008)

  • Caused by sub-prime mortgage failures and deregulated lending practices.

  • Required government intervention via the American Recovery and Reinvestment Act (2009).

RON PAUL (LIBERTARIAN) PERSPECTIVE

  • Advocates for a true free market; critical of government bailouts.

  • Emphasizes accountability for financial mismanagement and corruption.