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Comparing The Philosophies Of Keynes And Hayek

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Chorus:
Which way should we chose? More bottom-up or more top-down?
The fight continues. Keynes and Hayek, Second Round
It's time to weigh in. More from the top or from the ground?
Let's listen to the greats, Keynes and Hayek throwin' down

Bottom-up is referring to Hayek’s view, which is more laissez-faire. Laissez-faire is a system or point of view that opposes regulation or interference by the government in economic affairs. Top-down is referring to Keynes's view, which is more dealing with the government taking control over the economy. John Maynard Keynes and Friedrich August Hayek were two well known economists of the Great Depression era with strongly opposing views. In the chorus the Chairmen Ref is asking the audience to listen to
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Hayek believes that the government has a negative effect on the economic growth and the quality of services. He suggests that “people work to live better,” which means, when the government allows there to be competition, people find new solutions to make their production more efficient for their own interest. He suggests that if the government stays out of the economy or have very little say, the economy will bloom to its full potential on what people demand and produce themselves. Hayek is embracing liberal views such as competition and self-interest as he believes those are the key factors that allow the economy to reach its full potential without government intervention. Hayek discovered and based his ideas on Adam Smith’s theory called the “invisible hand”. Adam Smith believed that the government had a negative effect on the economic growth and the quality of services and goods. He suggested that if the government stayed away from the economy people would be free to compete by finding their own solutions to make production more efficient. Hayek saw the positive and remarkable effects of this theory and he started to believe in “entrepreneurship” and promote ideas similar to Adam Smith.

Keynes:
My solution is simple, and easy to handle
It's spending that matters, why's that such a scandal?
Money sloshes
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Keynes believes that the government has a positive effect on the economic growth and the quality of services. In recessions, businesses and people tend to spend less money. He was against this idea and suggested that “it’s spending that matters” because lower spending results in demand falling and job losses. Keynes's solution to the problem was for the government to play an active role in the economy. If the government plays an active role in the economy, the economy will bloom and progres to its full potential. He believes that the government should stimulate economic growth by increasing demand through increased credit and public spending. Keynes is embracing liberal views such as economic freedom for the people to an extent in which it boosts the economy as he believes it’s the key factor that allows the economy to reach its full potential with government intervention. Keynes disagreed and strongly opposed Milton Friedman’s ideas. Friedman suggested the monetary policy, controlling the money supply, can help out the economy throughout recession. On the other side, Keynes suggested that monetary policies play a very little role in stimulating the economy and aggregate demand. He disagreed with Milton Friedman’s ideas as he believed the government should encourage spending and discourage
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