TEST: Keynsian and Friedman Economics

Supply and demand side economics differ in several small ways. Supply side believes in international trade (free trade). Demand side has a nationalistic sense. Supply side says the economy will regulate itself. Demand side says the economy needs some help. These differences really boil down to the same thing. Supply side economics, with Milton Friedman at the helm, fly under the banner of unrestricted and uninhibited economy; the government should not interfere with the economy or else you have a false economy which tells you nothing. Kensyian economics, which supply side economics were created in response to, profess that the government needs to occasionally preform tasks to stimulate the economy.

"My policies are based not on some economics theory, but on things I and millions like
me were brought up with: an honest day's work for an honest day's pay; live within
your means; put by a nest egg for a rainy day; pay your bills on time; support the police."
--Margaret Thatcher

From 1979 to 1990 the Prime Minister of the United Kingdom was Margaret Thatcher. Thatcher (photograph below) was one of the major proponents of a free market, entrepreneurship, and supply-side economics. As an incoming Prime Minister, she had to deal with a poor economy due largely to a high unemployment rate (1.4 million, according to BBC News.) This was a deciding factor in the election of Thatcher, as it largely concerned the population of the time. Having been elected, Thatcher wasted little time in imposing her reforms to the economic system. These reforms included privatizing, deregulating, and Trade Union reforms. Like most supply-side economists, Margaret wanted to reduce the governments interference in the economy. Supply-siders think falsifying an economy will eventually come back to haunt the society it bolstered. Thatcher believed that if everyone did their job, spent the money they made, and saved a little money away than an economy would regulate itself without outside interference. This is not a society without taxes; taxes must still be paid for people who work not for a company, but for the public (i.e. police in her quote at the top of this page.) Franklin D. Roosevelt is a prime example of demand-side economics, which favors government influence in a countries economy; his New Deal falsified many jobs as the government attempted to lower the unemployment. Reagan, a contemporary to Margaret Thatcher, was a supply-side economist, and also worked to lessen the government's influence in the economy.

Supply-side economics makes more sense. Should the government, or anyone, interfere in the natural ups and downs of an economy, a false idea of economic health is created. The key to a healthy economy is self-reliance. The only things a government can do make the economy look better on paper, but really don't help. If an economy is bad it is on the shoulders of consumers to change their habits, or else to adjust to the change. However, demand side economics might make a country feel better and unfortunately a lot of people opt for this safe feeling than the reality. I don't think the economy ever really recovered from the Depression. FDR just hid the problems and they're only now starting to reemerge.