C boils down to the idea that there is a specific

This preview shows page 7 - 10 out of 15 pages.

C) Boils down to the idea that there is a specific role for the government when it comes to public goods (things that are in individual interest, collective interest, things that will not spontaneously emerge) Ex: lighthouse is a public good. Society does not spontaneously build lighthouses because any ship can use the lighthouse, and if you put the money into it, others will gain competitive advantage The state could force everyone to contribute to a collective good that everyone wants However, will not be spontaneously provided Government should restrain itself An orientation towards negative interference Reform Liberalism Late 19 th century- 1970s
From negative freedom to positive Focuses on negative, the right to be left alone If you can’t make choices, then you don’t have freedom Government should promote equality of opportunity Legitimate for the state to equalize opportunity (rich pay more taxes, poor can expand the number of choices they have) Paradoxically, it is increasing the amount of freedom in society as a whole Economic Liberalism the idea that the markets should be left alone some people are fundamentally rich, while others are poor Leave the economy alone and let things happen, led to a lot of criticism There are two grounds on which to justify a hands-off approach to the economy A) Rights If we start off with a system where we are all equal, and then start to tax people more because they are rich, it is no longer equal We should all be treated equally under the law B) Utility What works best? A free market creates the best economic outcomes If we interfere with the mechanism, we will make things worse rather than better The Invisible Hand: the key is competition. If there is nothing going to prevent a new entrepreneur, they will create all kinds of products. The competitor will make something that is a little better, and so a cycle of innovation begins. Competitor could also make their price cheaper. This means that more people can purchase their product. Focussing on your own individual interest, while society also benefits as a whole Reform Liberalism and the Economy J.M. Keynes: Normal circumstances can allow for free markets, however markets can also fail Government can make things better in certain circumstances Ex: Great Depression. They thought the market would fix itself in the long run Why will markets fail in some cases? If people start saving their money, they aren’t spending. Demand goes down and factories start making as many products. Employees laid off, factories spending less. A collapse in demand makes a market fail The state can take on the responsibility to boost demand, and get the money out there People get hired when this happens, cycle continues other way Neo-Liberalism and the economy 1980s-90s, response to stagnation Economy is stagnant and in inflation
A return to classical liberal ideas about non-interference in the economy (Fredrick von Hayek)

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture