POLS 071 Lecture Notes - Lecture 13: Keynesian Economics, Invisible Hand, Economic Nationalism

• School: University of Vermont
• Department: Political Science
• Course: POLS 071
• Professor: Peter A.Von Doepp

Document Summary

All states: need to be concerned with their economies. Leaders have more popular support when the economy is doing well, and it gives them legitimacy. Strong economies mean more revenue and spending capabilities. Powerful economy gives influence and leverage on the international stage. Governments provide basic public goods (1) markets underprovide public goods no individual can provide (2) government"s responsibility to tax and responsibly provide for collective good. Driven by competition: government must create conditions where markets can succeed. Protect prosperity and contracts and break monopolies. Government has to manage capitalist economic cycles through fiscal policies (taxing and spending: use of fiscal policy to manage downturn: Cut taxes for the consumer class (keeps money in people"s wallets so they spend more) Increase government consumption which employs people in collective public goods projects (i. e. building roads and bridges: requires deficit spending, use of fiscal policy to manage upturns: Invigorate the production aide of the economy, probusiness.