Enst 201 1st Edition Lecture 33 Outline of Last Lecture I N A Outline of Current Lecture I Economics Current Lecture I II Economics who gets what when and how Three schools of though neoliberalism market fundamentalism Keynesian economics Market socialism a Neoliberalism does not mention any deficiencies and elevates free market policies i Different from laissez faire because neoliberalism has added on the layer of liberty max freedom comes when consumers can make decisions without interference from government ii Core Principles 1 Say s Law 2 Real Business Cycle Theory explains booms and busts in society 3 Efficient Market Theory 4 Rational expectations hypothesis 5 Free trade b Hayek disciple is Milton Friedman v Keynes i The core of both of their values is to ensure freedom and liberty ii Keynes collapse of middle class is biggest threat to liberty iii Potato chips wood chips and computer chips 1 would rather live in a country that makes computer chips because it is a sign of wealth and advancement a Ergonic axiom b Macroeconomics 4 goals i Economic growth ii Low unemployment iii Low inflation iv Sustainable trade deficits 1 Sustainability goals are missing because these goals are hard to quantify they can also be seen as not being a part of the economics discussion 2 Quality of life is not mentioned and the shrinking middle class is missing These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute a Keynes father of macroeconomics behavioral economics and the idea that optimization needs to be balanced by resiliency b Neoclassical economic theory relegates national interest i Promotes policies that favor global economic growth even if they hard the interests of the US ii American economics is based off Alexander Hamilton s ideals 1 Tariffs were promoted if we had followed Adam Smith s ideals we would still be a developing country a South didn t like tariffs because they would have suffered punishments for exporting things like cotton b North liked it because it protected their markets c Many economists especially in business schools continue to teach the tenets of neoclassical economics even though they know this constitutes a fantasy version of reality i They don t personally believe in this though d Problems with GDP as a measurement tool i Inequality ii Doesn t take into account the negative effects
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