Keynes was in favor of government influence in determining monetary supply in the economy. The government must use tax, spending notwithstanding deficits as economic instruments for the economy. Keynes believed that when these tools are a proper use, the economy will realize full …show more content…
According to Hayek, people should be allowed to choose freely without government interference. He argued that there is no need for central planning approach to the economy. He argued that central planning would only solve technical issues, but not economic problems. Hayek, who came up with the Chicago school of thought, believed that market forces should be left to control the money supply/ demand. In this instance, the market forces of demand/ supply should be left to determine the level of quantity along with price. Hayek advocated the free market within an economy (Fukuyama 2011).
Based on my arguments above, I would openly, as well as totally agree with Hayek. There is the need for less government intervention in solving economic issues. Less government intervention results in free markets together with perfect competition, allowing the forces of demand and supply to determine prices along with quantity within an economy. In some cases, government intervention can be promoted by political interferences. This intervention would worsen the scenario due to conflict of interest (Fukuyama …show more content…
This tax reduction aims at improving economic growth by offering incentive for small-scale business by encouraging them to save. The individual taxes were reduced, hence promoting savings among the low-income individuals. President Reagan realized when low-income people are relieved from tax, they will highly be motivated to save. This motivation would improve economic growth of the country (Steuerle 2008).
In 1964, Kenedy-Johnson enacted the tax reduction act. It resulted in a reduction in individual tax of all citizens of the US by 20%. This time, all cadres of citizens benefited from the fee cut. This tax cut was seen to respond better to the economic situations as compared to a tax cut by President Reagan in 1981. By enacting a tax cut across the board, it is clear to note that the fee cut was void of discrimination by reason of it favoring everyone (Steuerle 2008).
The tax cut that was implemented by George Bush in 2001 lowered the rates of tax making retirement simpler. This tax also had an exclusion from gift taxes. This tax cut was to last for a period of 9 years.
In 2003, President George Bush also implemented tax cut. This tax cut, the jobs and growth relief reconciliation act (JGTRRA). It majorly targeted relief reconciliation, economic growth and employment (Krugman & Wells