1. Kim Rodney
Position Paper
It could be argued that economics may be summarized as the study of how
societies and individuals meet their needs and wants. This source contains the author’s
opinion about the role government intervention should play in economic recovery.
According to the source, recession cannot be helped by government intervention; only
by the actions of the producers and consumers can the economy be healed. Liberalism,
as an economic idea offers many different options for society in dealing with times of
economic distress. The right, more capitalist side of the spectrum supported by Adam
Smith would likely argue that the government needs to leave any healing to the
“producers and consumers.” An opposite perspective would be those who have adopted
a more left wing or socialist approach to modern liberalism. They may say that the
government needs to play a larger role when the economy is in trouble, as without
intervention, things like recessions may worsen. When faced with a question concerning
what degree the perspective developed in the source should be embraced, one could
argue that this perspective should be supported to only a certain extent. It may be
argued that both the government and the body of the people need to play a role in
healing the economy.
There are some individuals may disagree with this statement. These people may
use the fact that countries that use Keynesian economics may run into problems with
debt. They may say that Keynesian economics is ineffective because politicians would
not want to raise the taxes back up in good times as they would lose popularity and
endanger their chances of being re-elected. They may use the governments of the
United Kingdom and the United States in the 1950’s and 1960’s as an example of
governments who ran into these types of problems. Other individuals, who may oppose
the source completely, may argue in favour of Keynesian Economics. They may use
Franklin D. Roosevelt’s “New Deal”, as an example in favour of having government
intervention in “bad times”. In the “New Deal”, Roosevelt put Keynes Economic Theory
into practice, putting more social programs down, and creating many jobs in public
works, like the building of the Hoover Dam. In this he worked to stabilize the banking
system and add a social security system. These individuals may argue that it is the

2. Kim Rodney
governments duty to play the role of a physician and treat the suffering economy. They
would likely say that Keynes theories are very workable if they are used properly.
Despite this, It may be argued that government and the people need to both play
some sort of a role in bringing the country out of economic “bad times”. Disputably, a
combination of the two extremes is the best way to approach setting up an economy,
and helping it to recover during bad times. During times of recession in a more right
sided, capitalist country, it is arguable that the “invisible hand” disappears because
people do not feel secure enough to spend their money, destroying the producer-
consumer relationship. During times like these, the government should step forward in
an attempt to stabilize the economy. It may be said that during “boom” times the
government should cut back on public works and social programs so they have enough
money to give the economy a boost in “down times”. They should also not do much
deficit spending, so that the country does not run into debt problems. Milton Friedman
and Friedrich Hayek both contributed to the system of Monetarism. This is a theory that
says that control of the money supply of a country is the best way to encourage growth
in the economic field while limiting unemployment and inflation. Money supply would
ideally be controlled through regulation of interest rates; inflation would soar if too much
money was produced by the central banks. Friedman thought that if money supply was
increased, consumer spending and demand also would raise, as well as inflation.
Ronald Reagan was a supporter of Friedman and Hayek, and decided he would like
less government control in society. He thought that reducing income, business taxes,
and regulation, and increasing military spending would leave money in the pockets of
the ones most likely to invest it economically. This would encourage economic growth
and benefit the working class in the end. One could say that this theory was
unsuccessful as the numbers show that the wealthy ten percent were earning nearly
half of the country’s total income.
Debatably, a mixture between Keynesian economics and Monetarism would be
the best way to handle economics. This model was first demonstrated by Tony Blair who
was the British Prime Minister from 1997-2007. He took a stance between the familiar
conservative approach and a more socialist approach, combining the good things about
Monetarism and Keynesian economics. This structure would combine some social

3. Kim Rodney
programs with free market policies. Blair increased spending on things like health care
and education, and introduced national minimum wage. He also introduced a tuition fee
for post-secondary education. Blair was a very successful politician, having one of the
longest terms in office of any of the Prime Minister. The Netherlands have also used a
similar model to Blair’s and it has been mostly successful in stabilizing the economy. If
the best features of Keynesian economics and Monetarism were taken and a system
was formed, it may be the best way to handle the economy in good times and bad.
When faced with a question concerning what degree the perspective developed
in the source should be embraced, one could argue that this perspective should be
supported to only a certain extent. There are some individuals who may disagree with
this, people who are on either side of the political spectrum. The right side would argue
on the side of the source because they would believe any economic healing has to be
done by the “economic body”. The left would argue that without government
intervention, any “economic wounds” may worsen. It may be argued that both the
government and the “producers and consumers themselves,” need to play a role in the
recovery of the economy. A mixture between Keynesian Economics and Monetarism
would perhaps be the best way to handle the economy.