The Main Ideas Of Hayek: Government Control Of The Economy

Decent Essays
1. The main ideas of Hayek were that he believed the government should have little control of the economy. Including that they should spend little and regulate little. The markets would take care of themselves, not the government. Politicians that followed these ideas were Reagan, Thatcher, and to some extent Carter.
2. The main ideas of Keynes were that believed the government should have more control of the economy. In times of trouble the government should spend more and take charge. He approved of government regulation and wasn’t much fond of completely free markets. Politicians that followed these ideas were Kennedy, Nixon, for the most part Carter, and FDR.
3. When in the Great Depression, much faith had been lost in the free markets.
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The implications of believing the economy is like forces of nature is that the economy is the one with the power. It’s very difficult to control, like the weather. And to go against the forces would be very dangerous. By believing the economy is like a machine implies that it can be controlled and fine tweaked.
7. For the Soviets and their mines, there were no incentives. None at all, there was no real incentive to work or do better. As such the workers put little effort in. For India the tariffs at the time of the raj were ridiculous. Leading to no incentives to deal with other countries. This caused most trade to be internal within the country. With the permit raj, the bureaucracy was slow and hellish to deal with; making little incentive to own and run a business.
8. Jeffery Sachs is a highly influential economist that fixed and essentially saved the economies of Bolivia and Poland. Shock therapy is when a government suddenly releases price controls, balances spending, liberalizes trade, and introduces a great deal of privatization.
9. The conditions in Bolivia were abysmal. There was hyperinflation, an unstable government, mass debt, mass poverty, and costs were constantly increasing. With all this and particularly the hyperinflation, they needed a desperate move which was the shock
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