Four Girls and a Guy

Welcome to our blog for our University College World Politics class!!!

Thursday, November 02, 2006

What is good for the state is the best way to go

By promoting and encouraging economic growth a country will be successful because the people will know that their government is backing them up.
Therefore, states do have a responsibility to promote economic growth and when the country needs intervention they should intervene. There is an economic theory called Say’s Law that states that all elements will clear within the market. Government spending will equal Taxation, imports will equal exports, and investments will equal savings. However, an a new theory emerged called Keynesian economic which refuted this agreement saying that investments don’t always equal savings because of the population’s expectations. If people believe that the economy is going to go into a recession they save and businesses don’t invest so there is an imbalance in the system. This causes the economy to go into a recession due solely to the population’s expectations.
At this point Keynes believed that it was the job of the government to intervene and balance the economy. The way to do this is to increase government spending which will cause the economy to balance by using all of its resources allowing unemployment to rise and the economy to become stable and prosper. One can see this in history if one looks at FDR’s proposal called the New Deal. This was an attempt to increase government spending however the economy was in such a trouble state that it was not until the United States went to war that they were able to utilize all of their resources and government spending. In return the United States government began to prosper again. As one can see it is necessary for the government by all means to encourage economic growth because if the economy begins to prosper to quickly the government can always increase taxation to level out the economy and there would still be an increase of GDP.
The government should even promote economic growth if it disregards other values and goals of their administration because it is what is best for the state as a whole that matters. I should also address that a leader should never say that they are going to have tax cuts because tax cuts are parallel to the state of the economy and its wellbeing. It should not be used as something a politician utilizes to get elected.

2 Comments:

Blogger lauren said...

so are you saying that the government should promote economic growth at all costs, despite values and ideals intrinsic to our country such as freedom? is less freedom in exchnage for more economic prosperity really whats best for the state?

3:12 PM  
Blogger JB said...

Yes, the government should promote economic growth at all costs. However I do not agree that the government should intervene to create economic growth at all cost. I am saying that when the economy is not prospering itself the government is then required to intervene. The economy with the law of supply and demand will prosper on its own. However sometime people begin to have speculations of the market and this can cause the economy to change. At this point the government also has the right to reassure people that they can continue buying and selling without speculation, to hopefully set the economy back to equilibrium.

1:05 PM  

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