Commanding Heights Episode 1 Journal
In the first episode of Commanding Heights, it begins by showing the world with a global economy that is tremendously suffering by the World War 1 events. After World War I, two extremely cerebral economists tried to solve the world’s economic troubles, John Meynard Keynes and Friederich Hayek. Keynes had the belief that a government in times of economic despair should spend money and go into a deficit in order to build the economy back up and then when the economy is stable again, should then grow a surplus. On the other hand, Hayek believed that for an economy to survive the free market must be allowed to have the power to decide. Just as the textbook states, Hayek believed that markets arose naturally. He believed that while at times unemployment would be high, government should not step in with more regulations. Hayek thought that government regulation on the market would lead to too much government control and would damage the economy. Both economists demonstrated the economic way of thinking as discussed in chapter 1 of the Macroeconomics textbook. They had to use assumptions to simplify things, and they most definitely had to think at the margin. Many governments followed Keynes theory after World War 1. During the Great depression, Roosevelt decided to use Keynes economic theory by spending lots of money, also known as the new deal. Roosevelt had the hoover damn built, interstate systems; he created new government agencies to put the unemployed to work. This economic system sure paid off for the United States. This theory is still pretty much used as we speak. The government continues to build recreational parks, museums, repairing the interstate systems, just spending money. Of course that money is not always spent wisely. I believe that Keynes theory will always be in effect for some time to come. After World War 2, a good portion of the world had adopted John Keynes economic theory. In many of those countries...
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