Friedman vs. Keynes I. INTRO . II. Milton Friedman A. Historic Background B. View of Financial system a. Early Views b. Later Views C. Affect on Coverage Makers a. Richard Nixon b. Ronald Reagan III. John Maynard Keynes A. Historic Background B. View of Financial system a. Commerce b. Unemployment C. Affect on Coverage Makers a. Prime Minister David Lloyd George b. Frank D. Roosevelt IV. Conclusion Friedman vs. Keynes The self-discipline of macroeconomics offers with the efficiency, construction, and habits of a nationwide financial system as a complete.
Macroeconomists search to know the determinants of combination developments in an financial system with explicit concentrate on nationwide earnings, unemployment, inflation, funding, and worldwide commerce. Milton Friedman and John Maynard Keynes, who was each nice economists, embraced the totally different challenges of the world by imposing their very own philosophies. Though each Friedman and Keynes have some similarities, sturdy disagreements in regards to the financial area set them aside. These two gents traveled totally different paths of economics their entire life to determine floor guidelines for the federal government to observe.
The primary son of a working class Jewish household, Milton Friedman was born in New York Metropolis within the early 1900’s. Milton graduated highschool earlier than his 16th birthday and acquired a scholarship to Rutgers College the place he started a specialization in arithmetic. Milton’s curiosity in economics was influenced by two economics professors throughout his undergraduate research in the course of the time of the Nice Melancholy (Friedman, 2005). He was satisfied that the examine of economics may Help resolve ongoing financial difficulties. Milton graduated with a double main of economics and arithmetic.
Milton has been credited as being probably the most influential economist of the second half on the 20th century. Although initially a follower of the theories of John Maynard Keynes, Friedman later revoked the concepts of central management after witnessing the consequences and moved in the direction of advocating free markets. Friedman’s views of financial coverage, taxation, privatization, deregulation influenced the presidential time period of Ronald Reagan in the USA in the course of the 1980’s and Margaret Thatcher in Britain. Friedman served on the committee of financial advisors for President Richard Nixon and was at occasions nsuccessful at convincing Nixon to simply accept his recommendation (Stein, 2006). Along with the affect on world leaders, Friedman’s affect on financial system can be evident in his contribution to the payroll withholding tax system. This technique was put in place to counteract tax evasion and tax avoidance both by home or worldwide taxpayers. Milton Friedman additionally advocated for a voluntary army and in opposition to a draft. Friedman’s strategy to financial system and authorities developed right into a laissez-faire view. He defended capitalism and criticized the concepts of the New Deal. John Maynard Keynes was born in Cambridge, England in 1883.
John’s father was a registrar on the College of Cambridge and an economist whereas John’s mom was one of many first feminine graduates of the College of Cambridge, and later the mayor of Cambridge. John Maynard Keynes started his research in arithmetic and the classics at King’s School of Cambridge (Reich, 1999). Keynes was strongly influenced by Alfred Marshall to vary his tutorial pursuits to politics and economics. Upon completion of his undergraduate research Keynes turned a civil servant in India for a spell and later returned to Cambridge to show economics.
As World Warfare I ensued Keynes returned to authorities employment and studied relations with battle allies. Keynes acted as an financial advisor to Prime Minister David Lloyd George (Reich, 1999). Keynes is greatest recognized for his work and theories of extended unemployment. In his 1936 publication Keynes’s Basic Idea of Employment, Curiosity and Cash Keynes explores the aggressive capitalist financial system that would transfer the financial system towards a state of full employment primarily based on a authorities sponsored coverage.
One may argue that geography, upbringing, and the social period that every economist was at throughout his skilled peak as contributing elements to their variations. Friedman’s beliefs seem like rooted in guidelines whereas Keynes believed that coverage ought to be carried out by superior elite. Whereas Friedman believed that the curiosity is an actual phenomenon is set by the availability of and demand for loaned funds, Keynes would argue in opposition to. Keynes would pose that the rate of interest is a financial phenomenon and is set by the availability of demand for cash.
There are apparent variations between Friedman and Keynes, but there are some underlying similarities of their work. Each of those economists have been nice advocates of their concepts; each noticed the nice despair as a disaster as a consequence of lack of demand; each wrote in favor of floating trade charges; and each have been on the aspect of freedom within the nice ideological wrestle of the 20th century. As well as, each economists believed that capitalism ought to be preserved and that there have been monetary insurance policies that would Help an inexpensive fee of development (Stein, 2006).
Based mostly on the analysis that I’ve performed I are inclined to lean in the direction of agreeing with Friedman, although I don’t reject the entire ideas offered by Keynes. Friedman’s strategy to an unbalanced financial system is practical to what’s seen in as we speak’s financial system. In following Friedman’s go well with, I think that the combination financial state of the USA as we speak, particularly rising gasoline costs and excessive unemployment, on account of vital world occasions. James/ECO-202 Reference Friedman, M. (2005).
Milton Friedman Autobiography; The Sveriges Riksbank Prize in Financial Sciences in Reminiscence of Alfred Nobel 1976. Retrieved October 20, 2007, from http://nobelprize. org/nobel_prizes/ economics/laureates/1976/friedman-autobio. html Reich, R. B. (1999, March 29). John Maynard Keynes His radical concept that governments ought to spend cash they don’t have might have saved capitalism [Electronic Version]. Time. Stein, B. (2006, November 27). Milton Friedman, freedom fighter. Retrieved October 20, 2007, from http://www. time. com/time
