S: Ebb and Flow of Liberal Economics
BC: Bibliography | - http://economics.about.com/od/useconomichistory/a/post_war.htm - Chapter 4 Part 2: Keynesianism - Commanding Heights - The Battle of Ideas - Teacher Reading: Great Depression, Keynesian Theory, New Deal and Roosevelt's Reforms - Related Issue 2 - Perspective of Ideologies: Chapter 6 - Chestermere Highschool Plone website, Teacher pages (power point, Cons of Communism) - http://www.allaboutphilosophy.org/fall-of-communism-in-russia-faq.htm http://future.state.gov/when/timeline/1969_detente/fall_of_communism.html
FC: Ebb and Flow of Liberal Economics By: Karen & Lisa
1: Pre World War I | - The end of the Industrial Revolution - The Sherman Anti-Trust Act (1890) was brought in to prevent monopolies between competing companies in the industry - President Theodore Roosevelt brought in the Meat Inspection Act (1906) and the Pure Food and Drug Act (1906) - Introduced the "square deal", it was to prevent large companies from taking advantage of their control - William Howard Taft was in power from 1909 - 1913 - He forced the Standard Oil Company to break into 34 smaller companies | Significants: This was a time of modern liberalism because there were acts of government intervention. Controlling the market and economy. This restricted classical liberal freedoms and principles of the market. These people relied on less government involvement because competition was what the economy was revolving around at that time.
2: 1920's Europe & North America | Germany: - Their money didn't worth anything because they were printing too much - hyper-inflation - Their economy was down because of the Treaty of Versailles During this time, the people of Germany were struggling a lot because of their failed economy | Significants: During this time, it was an era of capitalism, little government involvement and private ownership. President Warren G. Harding was elected and believed in reduced taxes, reduced immigration, and preserving the American society. When Coolidge came into power, he further reduced personal income taxes. This only benefited those who were rich. His policies reflected classical liberalism in the economy. | - This was a time of prosperity and spending in North America - Consumerism was introduced, this made products cheaper and more consumer spending - There was income disparity, different wages between the rich and poor
3: - Stock prices of successful companies went up - Everybody started to borrow money from banks to buy stocks thinking they would be rich overnight - Prices of the stock market stopped in October of 1929 - Investors tried to sell their stocks before prices dropped even more - This led prices to drop even more - Stock Market crashed on October 29th, 1929 | Stock Market Crash | Significants: The American economy was on a boom, so high that when it crashed, it crashed hard. Reason it crashed so hard because there was no government involvement in the economy to regulate it. But some economists argue that this is the norm of the free market business cycle.
4: The Great Depression | - Investors had buried themselves into huge debts and had worthless stocks - Banks went bankrupt - That meant everybody loss their savings - Unemployment dramatically rose because employers did not have anymore money to pay them - International trade slowed down because of new tariffs to promote domestic goods - Huge gap of income between rich and poor - This led to government intervention in economics to try to establish some kind of stability - Germany went to extremism | Significants: The Great Depression led to increased government involvement in the economy, which still lasts to this day to prevent another devastating intervention. Because of the downfall of the capitalist economy, people started to support collectivist ideologies to provide society and the citizens with economic stability. The economy and society shifted from classical liberalism to a mixed economy and modern liberalism.
5: Roosevelt's New Deal | - He was elected in 1933 - Believed in times of prosperity, the government should control inflation - His new programs concentrated on relief, reform and recovery - Started the American welfare system - Brought in The Federal Deposit Insurance Corporation, Agricultural Adjustment Act, Social Security, Securities and Exchange Commission, etc. - Redistribute power to businesses, consumers, farmers and workers | Significants: At this time, there have been more government involvement then ever before in the US. The New Deal wanted to put some regulations in the economy but still preserve the freedom in the market. It's purpose was to protect citizens from the uncontrolled capitalism. Even though the country still stayed capitalistic after the Great Depression, helping the average citizen was seen as the shift from classical to modern liberalism.
6: Significants: Keynes theories influenced F.D. Roosevelt's New Deal policies during the Great Depression. His theory is the opposite of classical liberalism because his theory requires government involvement in the economy for stability where as classical liberalism opposes it. But those who support classical liberalism say the recession is all normal. His ideologies lasted until the times of 1970 - 1980's. | Keynesian Economics | - Also known as demand-side economics - Developed this theory by studying the Great Depression (1930's) - Believed that government should intervene at the appropriate time in the economy, control inflation - Wanted to stop the bust and boom of the economy, keep it stable - Government should stimulate the economy by decrease interest rates and taxes and increase government spending - Use of monetary and fiscal policy
7: Canada and the Depression | - Prime Minister Richard Bennett was elected in 1930 - Created Bank of Canada, controls the country's money supply, regulating the economy - William Lyon Mackenzie King was elected PM in 1935 - More government involvement, brought in social programs and a mixed economy - C.D. Howe also contributed - Trans-Canada Airlines (1937) - Unemployment Insurance Act (1940) - Created employment from producing goods for the war | Significants: After the Great Depression, Canada's government got more involved in the economy and brought in public institutions and social programs. Making Canada a modern welfare state and a mixed economy.
8: Post World War II | - Coming out of WWII, it spurted an economic growth with high employment in factories and new industries - A lot of people started moving from the suburbs into the city - Under Sir William Beveridge's power he created National Health Service Act, National Assistance Act, and National Insurance Act in 1948 - Britain became a welfare state - Canada also started programs of a welfare state - Such as AECL (1952), Universal Health Care (1966), CRTC (1968), CPP (1966), FIRA (1974) | Significants: This was an era of creating a publicly-funded "social safety net" for the citizens. Providing programs such as employment insurance, elderly assistance, child care, and universal health care. This was all public owned, no private ownership. Britain and Canada adopted the century liberalism. Which is having government involvement, helping others, and adopting the welfare state idea. This would include raising the taxes for the social programs. Leaning towards the left side.
9: 1970's | Significance: The US went into the recession because they were spending to much and that caused high inflation and unemployment. People started getting concerned with the demand side economic so they decided to switch to supply side economic which was neo-conservative. | - Britain, Canada, & US changed by accepting trade, international cooperations, foreign aid, and others. - The US entered a recession with problems like high inflation and high unemployment. - The US withdrew from Bretton Woods agreement making gold prices go down causing the worlds currencies to go down - Oil production started reducing, making oil prices rise - Side effects: prices of other goods started rising and slowed the economy - When a recession and high inflation happens at the same time this is considered stagflation. Stagflation happened because of high rising oil prices
10: Monetarism | - Swing of an economic pendulum, alternated between intervention and free market, returning to principles of liberalism - Lasted till 2000's - Controls money supply, encourages economic growth, limits unemployment and inflation. - Friedman believed that inflation was primarily the result of an excess supply of money produced in bank - yearly money supply should be kept steady to allow for the economy to grow. | Significance: This stresses the importance of the money supply in determining nominal GDP and the price level in the economy. Milton Friedman was the founder of this policy and what influenced his ideas was Keynesian economics. Friedman introduced the idea of Monetarism to go against Keynesian economics lack of focus on the importance of money control in the economy.
11: Reaganomic | - Elected in 1981 - Reduced income and business taxes, regulations and increased government spending on the military - Were also known as trickle-down economics - Supply side or trickle-down economics hold the view that decreases in taxes, especially for corporations, - Thought to be the best way to stimulate economic growth - This system was also contradicting itself because it did not really help the economy but raised the debts | Significance: The significants during this time was mainly about the supply and demand issue that was occurring. Before he was elected, the US had regulations and government involvement, supporting the Keynesian Economics. But when they started to experience stagflation and economic crisis, the US went back to capital liberal principles and away from interventions. This was what Regan wanted, less government involvement and regulations. "Get the government off our backs".
12: Thatcherism | - Margaret Thatcher was Britain's Prime Minister from 1979 - 1990 - Thatcher tried to reduce government involvement and increase economic freedom and entrepreneurism by keeping with classic liberal principles - Britain sold many of their private owned houses to people who were renting them - Privatized many utility companies - Like Reagan took hard line with labour unions. | Significance: Margaret tried to make Britain's economy better by reducing taxes, privatization of public companies and less government involvement. Her whole idea was on the supply-side. She also encouraged people to save money so that they could buy government owned houses. Thatcher's plan failed because it resulted in one of the biggest unemployment issues in Britain. She was like Reagan, trying to raise the economy but all she ended up doing was cause more problems.
13: The Fall of Communism & Increasing Economic Freedoms | - Controlled the people to the point the government saw backlash - People said no to communist government and voted it out till it disappeared. (USSR 1991) -Gorbachev wanted to improve the soviet exports fund modernization and have high quality goods -Americas and Ukrainians president met in 1994 to discuss how the Communist state can change its economy by encouraging privatizing & competition -2002 Ukraine addressed competition, foreign trade, and taxation. -Mexico joined NAFTA with USA & Canada to increase freedom and to improve the economy | Significance: The fall of communism was better for the people because under a communist government people had no freedom whatsoever. People who worked had no set time for when they finished and had no minimum wage, they were also forced to sell off their land. After the fall in 1991, people started having better lives and had a voice (being able to vote). Economic freedom started increasing and other countries such as Ukraine started opening their minds about competition and privatizing so that it would help with the economy. Foreign trade and taxations were addressed making it more of a capitalist society. Swinging from radical economy to a reactionary one.
14: Blair's Third Way | - Ran in 1997 on a platform of a third way, It wasn't similar to conservatives approach or "old labour party" - Focused on trade unions, public ownership, strong welfare state, government intervention, and redistribution of wealth. - Blair's Third Way was a new form of mixed economy - Attempted in balancing the individualist of monetarism with the collectivist values of justice - increased public spending on health care and education, introduced a national minimum wage and introduced tuition fees for post secondary. | Significance: During Tony Blair's leadership he made many changes to Britain's economy he changed it into a mixed economy. It was very different from what Thatcher had in mind to help the economy. He gave people benefits and help them by increase spending money on social programs. After he had enforced all these changes many other countries tried to adopt similar ideas to try too be in the middle of laissez-faire and socialist interventionism.
15: The Current Economic Crisis | - President Barack Obama was elected - When the global economy credit and mortgage crisis started happening it made them question the policies - The economic melt down at this time is making them think lots about the unregulated free market - What triggered this was a liquidity shortfall in the United states banking system - This caused many institutions to collapse and the drop of stock markets around the world. - Interest rates started rising as housing prices dropped | Significance: What goes on in the current economy is what matters most. We are leaning towards a bad recession. Housing prices are dropping, and people are unemployed because of the high interest rates and companies going bankrupt. Companies may have their freedom but what Canada and US have agreed in 2008 is that government involvement would regulate their national banking system is the best ways to help and solve