Evolution to Modern Liberalism Top ten things you need to know

Evolution of liberalism - Enlightenment 1 Evolution of liberalism - Enlightenment response to the high level of government control Freedom from the government (negative freedom)

Evolution of liberalism - Progressivism 2 Evolution of liberalism - Progressivism During the nineteenth/twentieth centuries – response to the level of corruption due to the low levels of government controls Freedom through the government by making things more even (positive freedom)

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Theodore “Teddy” Roosevelt 4 Theodore “Teddy” Roosevelt Progressive movement Response to laissez-faire Robber barons (Rockefeller, Carneigie) Trusts (Standard Oil) Square Deal – everyone have a chance to succeed Anti-trust laws (break up monopolies) Protection for unions Labor laws

Franklin “FDR” Roosevelt 5 Franklin “FDR” Roosevelt Great Depression New Deal Government programs to “Prime the pump” Work programs, bank reform Pensions and employment insurance More labor laws to protect workers

6 Influence of J.M. Keynes Deficit financing government uses fiscal and monetary policies to reduce the extremes in the business cycle During a recession the government will go into recession During a recovery the government will pay off the deficit

Fiscal and monetary policies 7 Fiscal and monetary policies Fiscal – taxes and spending Monetary – money supply and interest rates

Vicious and virtuous cycle 8 Vicious and virtuous cycle When people lose their jobs, they spend less money, which means other private businesses lose money and need to lay people off, making the cycle worse By using fiscal and monetary policies you can increase demand, which will reverse the cycle, making it virtuous DEMAND- SIDE ECONOMICS If the economy becomes overheated you want to slow it down, so you reverse the fiscal and monetary policies to slow it down

Taxes Revenue Spending Funds To reverse a recession Deficit Deficit Financing Taxes Revenue Spending Funds To reverse a recession Deficit (Debt)

Taxes Revenue Spending Funds (Surplus) Pay off the deficit To reduce Deficit Financing Taxes Revenue Spending Funds (Surplus) Pay off the deficit To reduce inflation

9 Concern - deficit If not paid off = debt

Why do we have such huge debts? 10 Why do we have such huge debts? People don’t vote for politicians who say they are going to reduce government services and increase taxes