Social Liberalism. Celebrity Economist Cook-Off: Producer’s Sheet

Celebrity Economist Cook-Off: Producer’s Sheet
-9842516764000Celebrity Economic Chef: Friedrich Hayek.
Chef Hayek’s commercial kitchen consists of the theory that no centralized planner or government is capable of substantially managing the economy. Hayek believes that the economy should be liberal and free from government intervention (Hayek, 2018). He openly criticized Keynes for his policies of government intervention in the economy. From his ideologies, it is clear that freedom from central planning is key to economic growth. Information or data that may be needed by a central planner to make sound and efficient financial adjustments may not be available. This is because the market produces data that is unique for each individual concerning the resources and conditions surrounding them. In addition, he believed that the Keynesian policies of increasing the money supply to combat unemployment would, on the contrary, cause inflation. In addition, (Laissez-faire) Hayek won the Nobel Prize in 1974 for economics.
Chef Assistants.

Assistant’s Name: Margaret Thatcher
Thatcher, who was the new Conservative Party leader, was a strong liberalist who believed in Hayek’s economic ideologies. Evidently, after meeting Hayek during a policy meeting, she approached him with his book The Constitution of Liberty, and openly declared her belief in the policies (Anirudh, 2018). For this reason, I chose Thatcher to be one of Hayek’s assistants.
Thatcher brought about economic changes in the United Kingdom during her reign as prime minister. She embraced monetarism and focused less on controlling unemployment and more on inflation. Moreover, she brought about the deregulation and privatization of industries in the United Kingdom (Dey, 2019). Hayek would work very well with Thatcher since they were allies who shared similar ideas and wrote to each other frequently where Hayek even sent her a handwritten copy of his book.


Assistant’s Name: Milton Friedman
I chose this person to assist Chef Hayek since both were firm believers of free-market policies. Friedman believed that demand and supply forces in the market were sufficient enough to control economic growth. He opposed the Keynesian economic policies and advocated for increased taxation to reduce inflation that was prominent during the war.
Hayek would agree to work with Milton because he also attended a meeting of the Mont Pelerine Society (Caldwell, 2019). The Society, founded by Hayek, was dedicated to preserving freedom of societies. Other policies proposed by Milton include a balanced budget, school vouchers, flexible exchange rates, the decriminalization of recreational drugs and a monetary growth rule.


Assistant’s Name: Ronald Reagan
I chose this person to assist Chef Hayek since he too believed that capitalism and free markets would save the nation from economic distress. (Amadeo, 2019). Reagan being a president of the United States came up with certain policies guided by Hayek’s ideologies which came in handy in saving the economy. First, he fought for the privatization of the lands in the United States, which were communally owned and produced negative returns.
Secondly, he advocated for reduced government spending, reduced income and capital gain taxes, reduction of money supply and removal of business regulation. In summary, the policies advocated by Reagan were aimed at reducing stagflation and recession. He was focused and combating the double-digit inflation rates prevalent in the country.
According to Reagan, a lesser tax on capital and income would create more incentives for businesses and workers, respectively. More workers lead to reduced unemployment which is a principal measure of economic growth.

The Team’s Tools and Ingredients
Tool/Ingredient

Purpose of the Tool and How Team Would Most Likely Use the Tool

Inflation

Low inflation rates increase incentives to spend and consequently reduce unemployment levels. For example, Inflation reduces the value of money and raises prices of commodities which eventually will reduce the purchasing power of businesses and individuals. Inflation causes economic depression and volatility of the business cycle and to smoothen the crust, the team can reduce government spending and money supply in the economy.

Taxes

Cutting taxes creates economic and investment incentive for businesses and individuals. Essentially, people will rather save than invest money and risk excessive government taxes. In addition, workers will not have incentive to work if most of their incomes are consumed by taxes. Higher taxes cause unemployment and stunted economic growth. On the other hand, government revenue lost from tax cuts is easily recovered from the revenue gains when an economy grows from investments and high employment rates. Milton Freidman was a strong advocate of this tool and is most likely to use this ingredient more to smoothen the business cycle pie.

Deregulation

Deregulation involves removal of restrictions, and policies that inhibit businesses to expand or prevents the establishment of new businesses. For free-market advocates, this is a key policy that allows the market to control the industry with minimal state intervention.
Deregulation has both long term and short term impacts. For example, there is increased competition since more companies are set up. This leads to the production of higher quality products and creates room for consumers to choose from a variety of available products. Secondly, the competition also leads to price balance and consumers can get commodities at lower prices. Hayek’s team would use this tool to permit the free market to set prices and promote growth.

Government spending.

A key ideology proposed by Hayek’s school of thought is the reduction of government spending. An increase in the amount of money spent by the government would increase inflation levels, which causes depressions in the business cycle. Moreover, more government spending leads to more debt and budget deficits. To prevent this, the team would use the balancing of government budgets as a tool to stabilize the business cycle.

Privatization.

This is a capitalist policy which proposes that to attain economic growth, every asset in the state should be privatized. Privatization grants rights to individuals who feel free to exploit their assets as they wish without restrictions. This would lead to more incentives to invest and engage in economic activities since individuals are assured of the rights of ownership of their property.
Ronald Reagan was a major proponent of the privatization of US lands to earn more revenues. In comparison, private lands and businesses earned more incomes than the state or communal owned property.

Judges’ Comments and Scores.
Judge

Score
(1-5)

Comments

Adam Smith

4

Proposes that greed is good for economic growth. Capitalism and free markets are key drivers of successful economies. He laid down foundations for the free market economies. Regarded as the Father of Economics, Smith is a strong proponent of Laissez-faire where the economy is regulated not by the government but an ‘invisible hand’ which stabilizes it (Wood, 2004). Moreover, supply and demand forces, consumer tastes and preferences and competition regulate the prices of goods and services in the market. He believes that the government should not interfere with the economy since that would be an infringement of freedom.

Karl Marx

1

Karl believes in socialism which involves public ownership of land and resources. He proposes the centralization of decisions where the government is responsible for all decisions of the economy (Wood, 2004). Capitalism leads to greed and inequality while socialism enables equal distribution of resources and income in the economy. He doesn’t believe in privatization and deregulation of property and businesses.

(Kyle Woo)

5

I believe that demand and supply are the best influences of economic growth and volatility of the business cycle. A good economy should be stable with prices being determined by market forces which act as Adam Smith called it “the invinsible hand&rdquo...