Compare And Contrast Keynes Vs Hayek
Keynes Vs Hayek
Whether you are on the left side (Democrat/Liberal) or the right side (Republican/Conservative), most people agree that the government should intervene in free markets. What you identify as (left side or right side) should determine how you feel on HOW MUCH the government should intervene into free markets. The left side feels the government should intervene more and the right feels the government should intervene less. Keynes vs Hayek gives some insight to both sides of thinking in their debate, but before I discuss the debate I feel like there is a few areas to cover before we delve into the debate, such as Central planning and Deficit Spending.
A centrally planned economy is an economic system in which the state or government …show more content…
John Maynard Keynes supported Deficit Spending during the recession, but that doesn’t mean that there aren’t some repercussions to the concept. Depending on how you interpret the concept one advantage could be that it has the potential to increase economic growth. Since the government would be spending excessively, it could afford to buy infrastructures for the country, which could potentially churn out more employment to the labor force. The power of control could be considered an advantage as well, since deficit spending could lead to a budget deficit, the government would think twice before they make an unnecessary investment, and with higher interest rates as a result of the budget deficit, it forces the government to brainstorm of ways to pay back the debt as soon as possible. Disadvantages of the concept are what overshadow most of the entire concept since one disadvantage would be that there would be practically no savings. In most cases a government or an individual won’t have many savings built up during a deficit period, this leads to a crisis when there is an emergency and there is no money saved up to spend on such emergencies. So to pay for the emergencies that do happen, we have to borrow from other countries or as an individual borrow from another entity, which leads to excessive debt and higher interest rates. Another disadvantage would be the rising costs
Whether you are on the left side (Democrat/Liberal) or the right side (Republican/Conservative), most people agree that the government should intervene in free markets. What you identify as (left side or right side) should determine how you feel on HOW MUCH the government should intervene into free markets. The left side feels the government should intervene more and the right feels the government should intervene less. Keynes vs Hayek gives some insight to both sides of thinking in their debate, but before I discuss the debate I feel like there is a few areas to cover before we delve into the debate, such as Central planning and Deficit Spending.
A centrally planned economy is an economic system in which the state or government …show more content…
John Maynard Keynes supported Deficit Spending during the recession, but that doesn’t mean that there aren’t some repercussions to the concept. Depending on how you interpret the concept one advantage could be that it has the potential to increase economic growth. Since the government would be spending excessively, it could afford to buy infrastructures for the country, which could potentially churn out more employment to the labor force. The power of control could be considered an advantage as well, since deficit spending could lead to a budget deficit, the government would think twice before they make an unnecessary investment, and with higher interest rates as a result of the budget deficit, it forces the government to brainstorm of ways to pay back the debt as soon as possible. Disadvantages of the concept are what overshadow most of the entire concept since one disadvantage would be that there would be practically no savings. In most cases a government or an individual won’t have many savings built up during a deficit period, this leads to a crisis when there is an emergency and there is no money saved up to spend on such emergencies. So to pay for the emergencies that do happen, we have to borrow from other countries or as an individual borrow from another entity, which leads to excessive debt and higher interest rates. Another disadvantage would be the rising costs