A New Front in the Battle of Ideas

Topics: Capitalism, United States, Stock exchange Pages: 2 (672 words) Published: January 26, 2013
Case 2-1
A new front in the battle of ideas

1. Does the global economic crisis signal that the American model of free market capitalism is fundamentally flawed? No, the global economic crisis does not signal that the American model of free market capitalism is fundamentally flawed because America government should definitely provide a support role for the corrective measures to protect its own economy, for example use of various fiscal policy for the economic stimulus, when the various decisions in the private sector of their country are believed to lead to negative economic outcomes, such as depression or recession, which leads to the wide hardship for America.

2. Keynes and Hayek aren’t necessarily household names, but they did get a boost when economist Russell Roberts created a rap video titled Fear the Boom and Bust with filmmaker John Papola. The video is available on Youtube after viewing it you should be able to answer the following question: Are you a Kenyesian ? or do you side with Hayek? I would side with Hayek, because Keynes believed that intelligent, well-meaning planners and by manipulating economic aggregates such as demand and employment can surely bring happy means to the economy. Hayek believed that individual decisions, imbalances between specific prices and demand or the interest rates and also the specific plans for long-term productive projects, are pillars of a true economy. To support, Keynes said that it was politically impossible to achieve a nominal wage reductions necessary to clear the market for labor which implies that, to let wages fall so that hiring would be cheaper and unemployment thereby reduced. Keynes instead promoted inflation as a means to trick labor into taking lower real wages. On the other hand Hayek’s believed that no equilibrium is possible when prices don’t or can’t adjust. In any country did wages or the price of labor shall be adjust downward in order to increase the demand for labor which should be...
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