(Kelly, M. and McGowan, J., 2012)(p.19 & 21). Fiscal policy is more effective in promoting economic growth, by increasing government spending or reducing taxes. Fiscal policy in economic has reflected both political and economic realities. Monetary policy has the ability to slow down the economy in order to promote full employment and inflation. The monetary policy to economic is to increase the amount of money, by cutting interest rates.
Throughout the essay we will examine four important IPE issues; trade and production, finance, technology and knowledge, and environment. Liberal ties will be made towards all these issues; however there are several mercantilist ideologies that creep into the playing field. First we will see how free-market trade policies and the UK's economic interdependence throughout the world furthers their liberalist approach. In the financial sector, ever since Thatcher's time in office, the UK has worked to deregulate and privatize its economy. Technology and knowledge can be correlated with nearly all areas of a nation's economic orientation.
• Creating Economic Reform- sought to reform the laissez-faire capitalist system that favored big business. Reformers who wrote about the corruption in business were called muckrakers. • Fostering Efficiency- tried to increase the efficiency of American society. The concept of scientific management ( the effort
ECO/372 Learning Team Aggregate Demand and Supply Models The Keynesian economists would look at the current proposal of increasing taxes as a governmental expression of the intermediate approach to the economy. The government taking control and having the people pay the price for their higher tax bracket. These funds would be used to decrease the amount of money owed by the United States. The effects of the economy would be absorbed and educated responses would be to lessen those impacts. To increase their taxes would be appropriate and this would be stream lining taxes at a time when the economy needs a boost.
‘Thatcherism’, the policies of monetarism, privatization, and self-help promoted by Margaret Thatcher during her time as Britain’s Prime Minister between 1979-1990. To evaluate Thatcher’s contributions to ‘Thatcherism’, one must first analyse her key ideologies in order evaluate to what extent they were of her own making. Social-Conservatism and Neo-Liberalism were Thatcher’s socially and fiscally orientated flagship ideologies which were a substantial factor leading to her success in the 1979 general election. Therefore, to determine to what extent ‘Thatcherism’ was Thatcher’s own creation, it is essential to see whether Thatcher acted on the zeitgeist of the late 1970s which would signify that ‘Thatcherism’ pre-dates Thatcher, or if ‘Thatcherism’ was a new concept created wholly by Thatcher. The first and most obvious clue to understanding what contribution Thatcher made to ‘Thatcherism’ is the name.
Neither managed to curb public spending totally but they did manage to change attitude towards it which transferred to subsequent governments. Both were supporters of free trade and encouraged the international market to adopt the same attitude as both nations were displaying signs of prosperity. Both had economic eras named after them although Thatcherism had tight control of monetary policy and spending cuts as part of the package and Reaganomics allowed budget and trade deficits to grow Reaganomics resulted in sustained economic growth at an exceptional rate with manufacturing firms protected whilst Thatcherism resulted in a recession focussed on manufacturing industry followed by an unstainable service sector boom. Regan and Thatcher
Monetary Policy Aaron Ashburn MMPBL/501 Feb-21, 2011 Dr. George Sharghi Introduction There is a consensus among analysts regarding the ability of economist’s to accurately forecast inflation, and consequently it appears that the relationship between real economic activity and inflation is ambiguous. It is the Fed's job to do what it can to reduce unemployment in order for the economy to sustain and to make sure that inflation returns to a level more consistent with its mandate. The central focus of U.S. monetary policy is price stability. Thanks to its control of money markets and banks, the Fed influences interest rates, asset prices, and credit flows throughout the financial system. To help attain inflation goals the Federal
Keynesian Theory Maynard’s theory is a combination of monetary policy of the central bank and the fiscal policy of the government. He believed that both policies, working in conjunction of each other, will help stimulate the economy during recessions (www.en.wikipedia.org/wiki/Keynesian_economics). For instance, if the central bank reduced the interest rate of the loans to commercial banks, the government in return signals the commercial banks to follow suit in reducing their interest rate. The government then begins to invest in the infrastructure, thus outputting income into the economy. This action then helps to create business opportunities, employments, and demands thus resulting in reversion of the initial imbalance (www.en.wikipedia.org/wiki/Keynesian_economics).
By this he meant that he was a new strand of the Labour party, which merged strands of neo-liberal policy and socialist policy, to which he called it ‘the third way’. The aims of the third way were to end the cycles of boom and bust, to restore a sense of responsibility to both monetary ad fiscal policy, to be able to afford increased expenditure on public services, to reduce the levels of poverty, to improve the competitiveness of British industry and finally to create conditions for the UK to join the single currency. Tony Blair wished to achieve this with a number of policies, one including the monetary policy committee of The Bank of England. This transferred control of interest rates from the government to the new monetary policy committee at The Bank of England. The purpose was to control
Thus demonstrating interdependency between the affluenza of consumerism culture and capitalistic economic growth. Response It is an accepted assumption that Consumerism (a social fascination with the acquisition of commercial goods) is a cornerstone of Capitalism. Just as Clive Hamilton suggests in the title of his institutional critique of the neo-classical assumptions of consumer sovereignty and rationality, Consumer Capitalism, he argues that the economic system is dependant on consumerist practices. Similarly Robert Heilbroner’s classical political economic analysis of the Ideology of Capital, via Marxist framework, demonstrates that a change in attitudes toward the ‘acquisition’ of capital and commodities is what allowed the bourgeoisie to realise themselves to be the dominant class and thus spur the development of a socio-economic system based on commodification to emerge. However other economists and socialists argue that the desire to consume an ever-increasing amount of commodities is one of man’s intrinsic values rather than the base of an economic system, it is his ‘hedonism unchained’ (Megone 2007).