POL2000/ Political and Economic Ideas

Running head: POL2000/ POLITICAL AND ECONOMIC IDEAS
POL2000/ POLITICAL AND ECONOMIC IDEAS
Name of the Student
Name of the University
Author Note

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POL2000/ POLITICAL AND ECONOMIC IDEAS
Task 1: Essay Question:
Should Governments use their power to limit the impact of recession?
Task 2:
Background of the debate:
Government plays an important role in managing economy of a country, as it helps in overall
growth, economic stability and balance between social financial status. Many regulations and
policies surrounding the concept of Government helping during economic crises have developed
throughout the years. The United Kingdom, United States follow the two approaches diligently,
known as monetary and fiscal policy (Libguides.mq.edu.au 2020). British economist “John
Maynard Keynes” first introduced fiscal policy in the year 1833 to 1946, whereas this policy
evolved around the concept of managing tax rates and expenditures of Government, and from
this day the debate originated.
Summary:
Liberal policies include the Classical liberalism policy that is also adhered by the
Australian’s policy and can also be implemented in stabilizing the economic status of a country,
as this approach supports the right to democracy of every individual in case of social, political
and economic factors(Oecd.org. 2020). The concept was developed in the late 19th century, as a
response to the “Industrial Revolution”, in Europe and North America, which was a collective
idea of “Johne Locke, Jean Baptiste Say, Thomas Robert Malthus and David Ricardo”. The
classical liberalism policy will help in developing and implementing economic freedom.

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POL2000/ POLITICAL AND ECONOMIC IDEAS
According to treasury.gov.au (2020), the response of the Australian Government was
adhering to monetary policy as they get support from the Reserve Bank of Australia. They have
responded to the Global recession in 2008 in a much effective manner than other countries.
Although, Australia is a country where there is colonization, and consists of many tribal and
indigenous people. They have managed all the crises due to their economic stability, due to the
trading business with Asia and China. It has been observed that due to their monetary policy and
stable economic condition of the Reserve bank, they saw a 0.4 percent rise in economy in the
year 2009, briefly after the recession. This eventually happened due to their strategies policies
that was followed by the Australians as per the guidance of Reserve Bank of Australia. In case of
the recession times, they took measures by decreasing interest rates by 100 basis points, which
means 6.0 percent. Through rigorous meetings of the “Australia Government’s Strategic Polcu
Budget Committee” which includes “Prime Minister”, “Deputy Prime Minister”, “the treasurer”,
“Finance Minister” to discuss about managing recession and crises along with processes that
must be applied to increase global economy. Therefore, it depicted from this scenario that
Government initiatives could change an economic crises, as well become effective in time of
recession. The Australian Government can handle the crises because, they had the capacity to
take risks to comfort consumers and stabilize the economic conditions.
According to Berg (2015), classical liberalism was not considered to be much prevalent
in Australian economy, but it got effective from the nineteenth century (Bartels, 2013). After the
effects of colonization, the concept of liberalization was taking its place in a much considerable
rate to ease the consumers and provide liberal rights to the indigenous people of Australia. In the
year 1788, the development of New South Wales governed by military gave a way to debate in
constitutional and philosophical grounds. There was a condition where there were no academic

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POL2000/ POLITICAL AND ECONOMIC IDEAS
for learning until the development of “University of Sydney and Melbourne”, in the year 1850
and 1853 respectively. Australian politics in nineteenth century, was revolve g around two
concepts, free trade and protection, which was a subject of debate. There were many colonies
that were developed by British Government later, and although there were policies that adhered
to free trade, there were people who were trading but was not free.
According to the actual founder of the fiscal policy, “John Maynard Keynes”, evaluate
his own theory in involvement of Government in recession or crises is that people generally
would save money to accustom to the situations of recession (Butler, 2015). Therefore, in an
argument the economist John Maynard Keynes”, depicted that low investment can result in low
productivity and increase in unemployment rate. The interference in these situations by the
government will help in managing the overall economic status.
Task 3:
Author 1:
The main argument of Carling, 2009, that to fill the gap the recession has made must be filled up
with fiscal policy.
Author 2:
The main argument of Galbraith, (1993), that to handle the economic instability a countervailing
power must be created and the Government must follow the old rules, which were followed
before World War 2.
The involvement of Government in managing macro-environmental factors and its effectiveness
have been debated for many decades, originating from the Great Depression in the 1930 (Temin
2016).

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POL2000/ POLITICAL AND ECONOMIC IDEAS
References
Bartels, L.M., 2013. Political effects of the Great Recession. The ANNALS of the American
Academy of Political and Social Science, 650(1), pp.47-76.
Berg, C., 2015. Classical liberalism in Australian economics. Econ Journal Watch, 12(2),
pp.192-220.
Butler, E., 2015. Classical Liberalism–A Primer. London Publishing Partnership.
Carling, R. (2009). Are We All Keynesians Again?. Fiscal Fallacies: The Failure of Activist
Fiscal Policy, 33.
Galbraith, J. K. (1993). American capitalism: The concept of countervailing power (Vol. 619).
Transaction Publishers.
Libguides.mq.edu.au. 2020. Subject And Research Guides: Economics: Monetary & Fiscal
Policy. [online] Available at: <https://libguides.mq.edu.au/c.php?g=696213&p=4937630>
[Accessed 19 March 2020].
Oecd.org. 2020. [online] Available at: <https://www.oecd.org/sti/42983414.pdf> [Accessed 19
March 2020].
Temin, P., 2016. Great Depression. In Banking Crises (pp. 144-153). Palgrave Macmillan,
London
treasury.gov.au, 2020. Australia's Response To The Global Financial Crisis | Treasury.Gov.Au.
[online] Treasury.gov.au. Available at: <https://treasury.gov.au/speech/australias-response-to-
the-global-financial-crisis> [Accessed 19 March 2020].