Major Principles Of Neo-Liberalism | Assignment
15 Pages3609 Words200 Views
Added on 2019-09-25
Major Principles Of Neo-Liberalism | Assignment
Added on 2019-09-25
ShareRelated Documents
Social Policy
Major Principles of Neo-Liberalism vs. KeynesianismThe major principles of Neo-liberalism relate to the theory of distribution of income and theory relating to determining the aggregate level of employment. About distribution of income, the assertion as per the neo-liberalism stated that the payment to the inputs of production whether it is to the labor or the capital is regarding their effort that they put to the final product. This is assured by equilibrium at the demand as well as the supply levels. The payment is decided as perthe supply (shortage or surplus of labor) as well as per the demand (which is affected by the effective level of productivity).For the theory of determination of aggregate employment, according to neo-liberalists, the factors of production like capital and labor in case of the free market would not remain idle but rather be put in use by the price mechanism. They believed in the self-adjusting mechanism of the economy to the level of full employment as well as to the use of monetary as well as fiscal policy so as to increase the level of employment permanently. These two theories have been convincing and contrasted with the thoughts that prevailed in the period between 1945 and 1980. In the initial years of this duration, the prevailing thought had been that of Keynesianism where the focus had been on the theoretical framework of determination of employment which stated that the level of economic activity is determined by the levels of aggregate demand. He also stated that in the era of capitalism there are continuous intervals when the process of generation of aggregate demand gets weak which leads to a rise in the levels of unemployment. At times, this weakness becomes grave and thereby creating the situation of depression (for example Great Depression 1921). In such a situation, the monetary, as well as fiscal policy can be used to stabilize the process of creation of demand.
Though there had been complete consent among all the Keynesians on the theory of employmentdetermination, there had been a conflicting behavior witnessed in the theory of income distribution. Such a conflict led to the victory of the thoughts of neo-liberalism.Answer 2In Australia, a minimum wage is witnessed more usually in the segment population of youngsters as well as those that are employed as part-time workers.Although there has been variation in the display for the series of the data, according to which the minimum wage appeared to be common in the women section of the country. The structure of occupation of the workers employed by minimum wage includes the workers who work in the factories, at the agricultural farms, in the forest area as well in the food processing industries as well as the medical service providers. The workers in small firms are employed in the largest proportion under the minimum wage criteria.In the list of the couples, the receiver of the minimum wage majorly the one who work on part time basis or full time while the other person works full time at a much higher rate of earning. In many cases, the minimum wage earner is an adult child who is still residing in his house. The result of this is that although the minimum wage must go more to the lower income households when the data is collected the minimum wage seems to be credited to the households all across the distribution levels of income. Hence, as a result, although 1/3rd of the workers receiving minimum wage are under the category of the poorest 20% of the working households but around 1/4th are under the category of the top 40% of the rich segment of the population. Thus on the parameters of measures of relative income,the employees receiving minimum wage are only 1 to 2% which are under the section of low-income households rest receivers of the minimum wages
are those who are already having the decent standard of living leading to rising in the consistencyand gravity of poverty. The minimum wage is the relatively inefficient method to induce the rise in the income of poor section of the country. To ensure the full level of employment, there is a need to create a sufficient number of jobs. To create a large number of jobs, the larger amount of fiscal deficit has to be tolerated by the economy. This is because the expenditure by the government has to be in large amount so as to induce the private investment so that both of them work together to create the demand for the potential level of production of the economy.Significance of Minimum Wage in AustraliaMinimum Wage in Australia becomes an important law in Australia people. It is more than a safety net, but it is considered an important Australian Values. The idea of the minimum wage considered workers as human beings and equal citizens, rather than treating them as mere units or commodities in the cost of production. Generally, it can be said that the Australian range of the minimum wage is high by international standards. Minimum wage plays an efficient role in the growth of the Australia in comparison to other countries. It has a great significance in growing the GDP of the country. The first significance of minimum wage in Australia is that minimum wage brings future growth by improving the available job opportunities. Employment is the biggest factor in the success of any country (McKenzie, 2014). Employment factor of the Australia people is very strong. It becomes due to the evaluation of the minimum wage in the country. It does not only enhance the per capita income of an individual but also brings a lot of growth opportunities for them. Apart of this, another significance of the Australian minimum wage is that it creates a degree of variation in the wages due to which it reflects the local labor market conditions and cost of living in a significant manner. Minimum wage system has done this by establishing a ‘Minimum Wage Benchmark.' Moreover, the minimum wage in Australia
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Comparison of Keynesian and Classical Economic Theorieslg...
|6
|1574
|431
Economic Possibilities for Our Children : Essaylg...
|5
|719
|263
The Minimum Wage Law and its Inability to Solve Poverty Issuelg...
|14
|4347
|198
Importance of Phillips curve in Orthodox Keynesianismlg...
|13
|3802
|285
Economic Report and policy 2022lg...
|2
|505
|52
Seminar Questionslg...
|5
|759
|45