Neoliberalism

Neoliberalism

1. Milton Friedman

   • monetarism
     • long run trade off between inflation and unemployment
       • inflation redistributes wealth, modifies value of lent or borrowed money, market less responsive
     • increasing money supply will not help unemployment
       • spending increases
         • prices increase
           • inflation eats up expansion
           • more jobs
             • lower real wages
       • monetary growth should be static
       • monetary policy may overact as expectations lag behind
   • spending based on permanent income

2. George Stigler

   • regulatory capture
     • tie between government and corporations
       • can't effectively regulate
       • may implement policies beneficial to corporations
     • better to have no regulation

3. Arthur Laffer

   • too high of tax rates distorts incentives to work, takes large amount of wage
   • too low of taxes, government doesn't have enough revenue
   • point of optimal taxation, the Laffer curve

4. Supply Side Economics

   • cut taxes of rich
     • rich will invest
       • jobs will be created
         • nation will increase competitiveness
       • research and development will increase productivity
         • marginal value of each worker will increase
           • wages will increase
             • tax revenue will rise