notes 12 economic ideals Flashcards
(17 cards)
what three negative effects did classical liberalism have
led to great depression, wealth gap, and “counter-ideologies” (ex. fascism and communism)
equality of _______
according to classical liberalism,
Modern liberalism, and
Communism
right (classical)
condition (modern)
opportunity (communism)
what are positive and negative freedoms?
positive - things the government should do (ex. provide clean water, education, healthcare)
negative - things the government shouldn’t do (ex. freedom of speech, freedom of religion)
what was the main cause of government action on social injustices, ex. by creating social safety nets?
suffrage expanded and more people were able to demand that the system be fixed (specifically advocating for protection against unemployment, wealth imbalances, etc.)
only in higher income countries
democratic socialism
aka welfare capitalism (north america)
provision of social safety nets and limits on abuses (specifically of financial dishonesty and environment)
active citizen participation, they are listened to
welfare capitalism
aka democratic socialism (Europe)
provision of social safety nets and limits on abuses (specifically of financial dishonesty and environment)
active citizen participation, they are listened to
significance of oil shocks
after ww2 high income countries were doing very well economically
1970s, price of oil suddenly increased globally
members of OPEC trying to manipulate the price of oil for political influence
led to stagflation
governments raised spending (keynesian principles) to try to fix economy, led to increased national debt instead
led to self-reinforcing, spiraling inflation
stagflation
costs rise very quickly but your income doesn’t
takes more of your money to buy the same things
Keynesian economics
a system where, when economy is down governments increase spending (on social programs, etc.) and lower taxes to get citizen income up, then when economy is up they lower spending and raise taxes to be able to provide for the economic downturns again
3-4 other names for neo-conservatism
trickle-down economics (called this by critics)
supply-side economics (opposite of demand-side)
Reaganomics (US president who started it)
(+ neo-liberalism, but diploma will use neo-conservatism instead)
neo-conservatism
reactionary
people complained about prices and wanted:
less regulation (+ consumer protection),
less gov spending (opposing Keynes)
less taxes (especially on wealthy, still opposing Keynes)
idea of getting rich people richer so their money stimulates economy and creates jobs (false reality, doesn’t happen like that)
2 influential economists to neo-conservatism and what they thought
Friedman - critic of Keynesianism, introduced monetarism
Hayak - free entrepreneurship is bad
wanted return of laissez-faire
monetarism
using interest rates to control price stability / supply of money
no other gov interference (minimal inflation)
led to sharp increase in interest rates –> deep recession in early 1980s –> further unhappiness about gov
how did they get out of stagflation in the 1980s (2 main ways)
kept trying neo-conservatism (/supply-side economics/reagonomics/trickle-down economics) and eventually it worked
stock market ⬆️ = confidence ⬆️ = more investment
cold war ended and global trade expanded a lot
lower income groups and countries didn’t see much growth, question of if this only helped the rich
great recession
early 2000s
era of little or no growth in individual incomes (stagnant)
led to economic downturn + financial instability
housing crisis
introduces question of taxing the rich more
2008 crisis
people taking risks with their money, big loans (CDOs)
basically selling those risks to someone else and profiting, eventually reaches someone and collapses and they lose money
2 types of investment
long term: value ⬆️ the longer you have the thing
short term (“shorting”): betting that a property or stock’s value will decline and sell it before that, if you’re right it’s very profitable, but also very risky
